[Listed VC In-Depth] ⑨ HB Investment Hits 'Dalba Jackpot', Steadily Sailing Toward 1 Trillion Won Club

Achieved 24-Fold Return from Early Investment in Dalba
Proven Investment Capabilities in Millie's Library and HPSP
Risk Management Through Investments Across Diverse Industries and Growth Stages
Samyang Comtech and DOF Awaiting KOSDAQ Listing in the Second Half of the Year

Editor's NoteThe Lee Jaemyung administration has demonstrated a strong commitment to fostering the venture sector. Large-scale deregulation and budget expansion are expected. Venture capital (VC) is drawing attention, as these firms are likely to play a pivotal role in the upcoming venture development process. In particular, listed VCs are in the spotlight. These listed VCs previously attracted significant investor interest by reaching record-high share prices in 2021, a year when the venture budget surged. In response, Asia Economy is launching a series that closely analyzes the strengths and core investment portfolios of major listed VCs.

Last month, Dalba Global, the operator of the premium cosmetics brand 'Dalba', surprised the market by successfully listing on the KOSPI. The company managed to clear the strict KOSPI listing requirements just 10 years after its founding. Even after the listing, its share price soared by more than 180%, solidifying its position as a leading representative of K-beauty on the global stage. As a result, attention is also focusing on HB Investment, which had identified Dalba Global's growth potential and global competitiveness early on and invested accordingly.

Early Identification of Dalba and Millie's Library Through Proprietary Screening Process

HB Investment made its first investment of 2 billion won in Dalba Global in 2020, when the company was valued at around 43.7 billion won. In 2023, HB Investment invested an additional 200 million won, bringing the total investment to 2.2 billion won. Dalba Global's current valuation has skyrocketed to 2.1168 trillion won. Immediately after Dalba Global's listing last month, HB Investment sold about 35% of its stake, recovering over 16.7 billion won and achieving a 24-fold return on its original investment. The remaining 65% stake is also expected to be gradually liquidated, raising expectations for additional profits. A representative from HB Investment explained, "Through our proprietary screening process, we verified Dalba Global's brand scalability and profitability and invested from the early stages."

Millie's Library, Korea's leading e-book subscription platform, is another prime example of HB Investment's early-stage discovery. The company made its first investment in 2017, just one year after Millie's Library was established. Follow-up investments were made in 2018 and 2019, totaling 5.75 billion won over four rounds. Millie's Library's valuation rose from 13.5 billion won at the time of the first investment to 139.4 billion won. Through KT Group's acquisition of a controlling stake in 2021 and the company's KOSDAQ listing in September 2023, HB Investment successfully recovered a total of 28.6 billion won. The exit multiple was calculated at 4.9 times.

Stable Returns Through Diversified Investment

Founded in November 1999, HB Investment is a first-generation venture capital firm in Korea. It has since established itself as a mid-sized house and was listed on the KOSDAQ market in January last year. As of February this year, assets under management (AUM) stood at 691.8 billion won (across 19 funds), with cumulative fund formation totaling 1.1216 trillion won (across 37 funds). The ratio of funding from the Korea Fund of Funds and Growth Finance is about 40%, indicating robust fundraising. With the launch of a private equity fund (PEF) division this year, the company expects to reach 1 trillion won in AUM within three years as it expands its business areas.

HB Investment maintains a policy of diversified investment, avoiding concentration in any particular sector. Its current portfolio consists of 40% deep tech/manufacturing, 40% software/services, and 20% bio/healthcare. A representative from HB Investment stated, "We are strengthening investments in trending sectors such as artificial intelligence (AI), semiconductors, and robotics, but we avoid excessive concentration. Minimizing risk to secure stable returns is one of our core strategies." The company also appropriately adjusts its investment ratio across early, mid, and late-stage ventures.

As a result, even amid a sluggish VC industry, HB Investment has consistently achieved stable exit performance, with an annual multiple of about two times, outperforming its peers. In 2023, the company recorded an exit amount of 128.7 billion won, ranking 12th in the industry. Notably, during this period, it hit the jackpot with semiconductor equipment company HPSP. After acquiring HPSP shares worth 19.3 billion won in 2021, HB Investment achieved a 4.3-fold return following the company's KOSDAQ listing in 2023. The company also successfully exited BioPlus (5.4 times), Vuno (5.6 times), and YPharm (3.2 times).

Last year, HB Investment recovered about 71.1 billion won through exits from SureSoftTech, a software verification solution company (1.8 times), BlueMTech, an AI-powered pharmaceutical commerce company for hospitals and clinics (2.2 times), and Coreline Soft, an AI-based medical device software company.

Operating profit has also shown steady growth, reaching 7.8 billion won in 2021, 9.3 billion won in 2022, and 10.6 billion won in 2023. However, last year, it slightly decreased to 6.5 billion won.

Dalba and Samyang Comtech to Drive Strong Results This Year

This year, several portfolio companies are scheduled for initial public offerings (IPOs), raising expectations for strong performance. Samyang Comtech, a defense materials specialist in which HB Investment made a pre-IPO investment, passed its preliminary listing review in April and is expected to list on the KOSDAQ in the third quarter of this year. HB Investment currently holds about 2% of Samyang Comtech's shares, with an expected exit multiple close to 30 times. Medical device company DOF has also entered a preliminary technical evaluation for a KOSDAQ technology-special listing, with an anticipated return of 3.5 times the investment (8.8 billion won).

The maturity of funds such as the 40 billion won '2015 HB Technology Commercialization Venture Investment Partnership' and the 61.5 billion won 'HB Growth Support M&A Investment Partnership' is also approaching. The gross internal rate of return (Gross IRR) for these funds is 12.8% and 17.9%, respectively, with performance fees of 3.1 billion won and 5.8 billion won.