[Exclusive] PEF Emerging to Buy Shares in Startups Invested by Naver

Eugene Asset Management Raises 138 Billion KRW Fund
Naver Invests in Secondary Shares of Today’s House and Ballan

[Asia Economy Reporter Kwangho Lee] Eugene Asset Management is forming a fund to purchase shares of startups invested in by Naver. The purpose is to secure shares of already verified companies to increase profitability.

According to the investment banking (IB) industry on the 5th, Eugene Asset Management is currently establishing a secondary fund for some existing share transactions among Naver’s invested companies. They have partnered with Biston Equity Partners. The fund will operate under a joint management method called ‘Co-GP (Co-General Partner).’ Accordingly, the fund name is likely to be ‘Eugene-Biston Institutional Private Equity Fund No. 1 (tentative).’ The target fund size is 138 billion KRW, with a maturity of 5 years.

The background for forming the fund lies in Naver’s restructuring of its investment strategy. Naver has found that a portfolio focused on minority equity investments had limited strategic investment effects. As the IPO market has stagnated, making it difficult for invested companies to go public, Naver decided to sell existing shares. After securing cash through asset sales, it plans to proceed with investments of a merger and acquisition (M&A) nature.

Eugene Asset Management has capitalized on this strategic shift by Naver. They see it as an opportunity to access leading domestic startups with potential to grow into global companies. They believe they can invest in potentially excellent companies at a low point. Past funds formed during economic downturns that recorded outstanding performance also influenced this decision.

The companies from which Naver is pushing to sell existing shares include ▲ Bucketplace, operator of ‘Today’s House’ ▲ accelerator ‘Futureplay’ ▲ Software as a Service (SaaS) company ‘Inka Entworks’ ▲ luxury goods trading marketplace ‘Balaan’ ▲ Indian fintech company ‘BalanceHero.’

The valuations of these companies, based on the most recent investment rounds, are on average about 50% discounted compared to fair value. The target shareholding ratios are Bucketplace 8.1% (110 billion KRW investment), Futureplay 1.8% (2 billion KRW), Inka Entworks 9.1% (5.3 billion KRW), Triple 0.5% (1.9 billion KRW), Balaan 7.9% (10.7 billion KRW), and BalanceHero 1.1% (1.8 billion KRW).

They plan to complete the existing share transactions through the Eugene-Biston Institutional Private Equity Fund No. 1 within the first quarter of this year. Afterwards, they aim to exit the investment through IPOs around 2024. Depending on circumstances, they also plan to explore exit opportunities for existing shares targeted by the secondary fund even before IPOs.