SGA Solutions Secures Cash for Eun Yujin Chairman's Personal Company through Acquisition of 'VoiceEye'

Eun Yujin, Chairperson of SGA Group.

[Asia Economy Reporter Jang Hyowon] SGA Solutions has acquired shares of ‘VoiceEye,’ a company specializing in the development of high-density 2D barcodes. The shares were previously held by Eun Yujin, chairman of the SGA Group board, through a personal corporation, but have now been transferred to the affiliate SGA Solutions. As a result, Chairman Eun has secured cash while maintaining control over VoiceEye.

According to the Financial Supervisory Service’s electronic disclosure on the 2nd, SGA Solutions announced that it will acquire 411,260 shares (21.88%) of VoiceEye at 18,000 KRW per share, totaling 7.4 billion KRW. Consequently, SGA Solutions’ ownership stake in VoiceEye increased to 50.46%, making it a subsidiary.

Previously, in December 2020, SGA Solutions acquired 160,000 shares of VoiceEye from SGA Holdings for a total of 1.6 billion KRW. SGA Holdings is the corporation at the top of the SGA Group’s governance structure, wholly owned by Chairman Eun.

Subsequently, SGA Solutions purchased additional shares of VoiceEye from SGC for 1.4 billion KRW, owning a total of 28.58% of the shares. The average purchase price was estimated at around 6,600 KRW per share. In this recent transaction, VoiceEye’s value was assessed at approximately three times that price.

VoiceEye’s total corporate value was evaluated at 33.8 billion KRW. The valuation was conducted using the discounted cash flow (DCF) method, estimating this year’s revenue at 20 billion KRW and assuming growth to 28.6 billion KRW by 2027.

VoiceEye is a company that supplies the ‘VoiceEye Code,’ a high-density 2D barcode for voice conversion. It was established in December 2020 through a physical division from SGA Holdings. The service converts barcodes recognized by smartphone apps into voice for visually impaired and low-vision users. Currently, it is utilized by government agencies, financial institutions, and the medical sector. Last year, VoiceEye recorded sales of 6.1 billion KRW and a net profit of 300 million KRW.

The transferor of the VoiceEye shares in this transaction is SGC. SGC changed its name from SGA Cloud Service in March and, as of the end of last year, had total assets of 400 million KRW, total liabilities of 6.5 billion KRW, and total equity of -6.1 billion KRW, indicating a state of capital erosion. It received a disclaimer of opinion from an external auditor at the end of last year.

The largest shareholder of this company is SGA Holdings, holding 90.15% of the shares. The CEO is also Chairman Eun. SGA Solutions has conducted loan transactions worth tens of billions of KRW annually with SGC. As of the end of the first quarter, approximately 2.6 billion KRW in loans had been extended to SGC. Through this transaction, SGC will be able to repay the loans and secure substantial cash.

Chairman Eun has secured cash through SGC while maintaining control. The governance structure has simply changed from ‘SGA Holdings → SGC → VoiceEye’ to ‘SGA Holdings → SGA → SGA Solutions → VoiceEye.’

Meanwhile, SGA Solutions operates businesses in security operating systems, application security, and electronic document solutions. In the first quarter, consolidated sales and operating loss were 5 billion KRW and 600 million KRW, respectively, representing a 9.5% decrease in sales and a return to losses compared to the same period last year.