VIG seeks up to $800m for fourth fund

Korea-focused mid-market firm VIG Partners is plotting the launch of its fourth vehicle targeting between $750 million and $800 million, Private Equity International has learned.

The firm is in talks with existing LPs for re-upping their commitments and will hold discussions with new LPs by the first quarter of 2019, a source with knowledge of the fundraise told PEI. The firm is targeting a mid-2019 final close for the fund.

For Fund IV, the firm is targeting commitments from more international LPs – even those that don’t necessarily have an outpost in the region – such as US endowments and foundations as well as European family offices, the source added.

Fund IV will have the same strategy as the firm’s previous funds, focusing on mid-market and control buyout opportunities in Korean consumer companies. It will have the same 2.5x money multiple return target as the prior funds, PEI understands.

VIG declined to comment on fundraising.

Limited partners in previous VIG funds included the Korean public pension fund National Pension Service of Korea and Seoul-based asset manager Hana Financial Group, according to PEI data.

At the end of 2016, VIG held a $600 million final close on its third buyout vehicle, exceeding its $500 million original target, Fund III is now over 70 percent deployed across six investments.

A third of Fund III’s investor base comprised US and European LPs with a presence in Asia.

Korea has been an attractive market for LPs because of its steady and solid returns over the years. Korean private equity funds from 2005 to 2014 generated a return of 1.4x invested capital and an average internal rate of return in excess of 20 percent, according to an analysis by McKinsey & Company.

Domestic and global private equity firms invested close to $90 billion across more than 870 Korean companies from 2005 to 2017. In 2015 alone, private equity investment hit a record $17.6 billion, mainly in buyouts, the report noted.