[PE Now] ‘Dong-e Beonjeok, Seo-e Beonjeok’ Bain Capital

A White Knight in the Korea Zinc Battle,
Bain Capital Strikes Again with Inspire Resort Acquisition

Global private equity firm Bain Capital made a surprise appearance last October as a ‘white knight’ for Chairman Choi Yoon-beom’s side in the management dispute over Korea Zinc. Then, on the 17th of this month, it once again shocked the domestic capital market by acquiring the Inspire Entertainment Resort in Yeongjongdo, Incheon.

Although private equity funds typically invest in any profitable business, Bain Capital’s moves are considered unpredictable. Let’s take a look at how Bain Capital has made money so far and how it has established its presence in various fields.

Never, ever incur losses

Private equity funds structure complex and meticulous contracts to create a system that ‘does not lose money.’ Bain Capital’s acquisition of Inspire Resort was actually not a purchase of management rights but a case where Inspire failed to meet loan agreements and Bain Capital took over.

Bain Capital had lent $275 million (about 400 billion KRW) to Inspire, using 100% of Inspire’s parent company shares as collateral. When Inspire violated certain financial covenants, Bain Capital gained the contractual right to take over the parent company’s shares. In fact, Inspire’s first fiscal year (October 2023 to September 2024) performance was poor, with sales of 219 billion KRW and an operating loss of 156.4 billion KRW.

When Bain Capital appeared as a white knight for Chairman Choi Yoon-beom’s side in last year’s Korea Zinc acquisition battle, it was said that “the clear winner of the Korea Zinc dispute is Bain Capital.” Bain Capital reportedly secured about 1.6% of the shares with over 460 billion KRW. If the promised internal rate of return (IRR) was not met, Chairman Choi’s side had to repurchase Bain Capital’s shares, and if this obligation failed, Bain Capital secured the right to sell Chairman Choi’s shares.

Huge success in cosmetics and medical devices in Korea

Bain Capital first made its presence known in Korea with the ‘7x jackpot myth’ Carver Korea deal. In 2016, Bain Capital acquired Carver Korea, the company behind the wildly popular ‘AHC’ brand in Asia, for 430 billion KRW. A year and a half later, it sold the company to global consumer goods giant Unilever for 3 trillion KRW.

Later, it made a huge impact again with botulinum toxin (Botox) company Hugel. After about a year of management disputes, Bain Capital persuaded the co-founders and succeeded in acquiring management rights in 2017. In 2022, it completed a sale worth 1.7 trillion KRW to the GS consortium.

Since then, it has attracted attention through acquisitions and equity investments in various companies such as online education company ST Unitas, enterprise software company Douzone Bizon, and P2P online finance specialist PeopleFund.

Clasis, a skin beauty medical device company acquired for 670 billion KRW in 2022, is currently in the process of selling its management shares.

Many funds... investing in everything profitable

The American Bain Capital originated from Bain & Company, which, along with McKinsey and BCG, is known as one of the ‘big three’ global consulting firms. It spun off from Bain & Company in 1984 and has operated completely independently since then. Mitt Romney, the 2012 U.S. Republican presidential candidate, was a co-founder of Bain Capital.

As of the second half of last year, it reportedly manages assets under management (AUM) of $185 billion (about 250 trillion KRW). Due to its massive scale, it invests in almost every industry worldwide.

The exact number of funds is not disclosed. It operates various funds ranging from buyout funds aimed at acquiring management rights, credit funds that earn money through equity investments, to debt funds that primarily provide loans.

This is why it is ‘here and there in a flash’ not only in Korea but worldwide.