[PE Now] Market Reaches Out First... VIG's Fourth Fund Gets Green Light

Preedlife Marks the First Exit for the Fourth Fund
Eastar Jet Draws Attention Amid Domestic Airline Industry Restructuring
The Skin Factory, Known for "Kundal," Considers Sale Amid K-Beauty Boom

There is growing interest in the portfolio of VIG Partners, one of Korea's first-generation homegrown private equity fund (PEF) managers. As its portfolio companies, which invested ahead of market changes, begin to shine, they are receiving "love calls" from various quarters. With the sale of Preedlife marking the beginning of a series of exits, there is a positive outlook for the fourth fund's investment recovery.

Over Fourfold Return from Preedlife Exit

VIG Partners launched its fourth blind fund in 2019, raising 950 billion won. This fund includes the following companies: the online and offline knowledge-sharing platform DShare; the funeral service provider Preedlife; The Skin Factory, operator of the beauty brand "Kundal"; waste management company VEF; fulfillment center Pasto; automotive manufacturer Tigen; golf platform Smart Score; and low-cost carrier (LCC) Eastar Jet.

The first investment exit from the fourth fund was Preedlife. Starting with Good Life, VIG Partners acquired several mid-sized funeral service companies, then acquired and merged Preedlife in 2020, growing it into Korea's number one provider.

Woongjin Group acquired Preedlife in April 2024 for 883 billion won. VIG Partners is expected to achieve more than a fourfold return on its original investment in Preedlife. VIG had already recovered a significant portion of its investment through refinancing and partial stake sales. Specifically, it sold 10% of Preedlife shares to Mastern Partners in 2021 and 20% to Kohlberg Kravis Roberts (KKR) in 2024, recovering a total of about 250 billion won.

Eastar Jet aircraft image. Eastar Jet

Eastar Jet Likely to Be the Next Exit for the Fourth Fund

There is also strong market interest in Eastar Jet, one of Korea's top five LCCs. As Korean Air's acquisition of Asiana Airlines and the launch of an integrated LCC accelerate the restructuring of the domestic airline industry, multiple investors are reportedly approaching VIG Partners behind the scenes.

In response, VIG Partners has stated that it will enter sale negotiations if favorable terms are offered. In January 2023, VIG Partners invested 40 billion won to acquire 100% of Eastar Jet. At the time, Eastar Jet was undergoing corporate rehabilitation due to management difficulties caused by COVID-19. Afterward, VIG Partners conducted a capital increase of 110 billion won, rescuing Eastar Jet from a state of complete capital erosion.

Immediately after the acquisition, in February 2023, Eastar Jet received a reissuance of its Air Operator Certificate (AOC) and resumed operations. This year, the company also reacquired its AOC license for cargo transport, expanding its business scope. The number of aircraft increased from just three before the acquisition to fifteen.

Eastar Jet's valuation is estimated at around 500 billion won. For comparison, another LCC, T'way Air, was valued at about 900 billion won at the time of its sale in February.

One of the leading potential buyers is Daemyung Sono Group, the largest shareholder of T'way Air. After acquiring T'way Air, Daemyung Sono Group planned to acquire and merge Air Premia, but recently lost the deal to Tire Bank. If Daemyung Sono Group acquires Eastar Jet, T'way Air could solidify its position as the second-largest LCC in the industry.

AK Group, the largest shareholder of Jeju Air, is also attracting attention. AK Group had previously attempted to acquire Eastar Jet. Amid the trend of LCC integration, Jeju Air is facing declining market share and a threat to its number one position, so AK Group may pursue an acquisition to strengthen its competitiveness.

Tire Bank, which owns Air Premia, is also drawing market attention. In May, Tire Bank signed a stock purchase agreement (SPA) with JC Partners to acquire a 22% stake in Air Premia and paid a deposit of 20 billion won. The deadline for the remaining payment is the end of September.

Kundal product image. Kundal

'Kundal' Soars on the Popularity of K-Beauty

The sale of The Skin Factory, known for its hair and body care brand "Kundal," is also under consideration. VIG Partners acquired 100% of The Skin Factory for 173 billion won through its fourth fund in 2021.

Recently, as interest in K-beauty has grown, multiple potential buyers have reportedly approached VIG Partners first to express interest in acquiring The Skin Factory.

The Skin Factory posted consolidated sales of 116.4 billion won last year, a 44% increase from 80.6 billion won in 2021, when VIG Partners acquired the company.

This sales growth was driven by increased overseas demand, particularly from the United States, Southeast Asia, and Japan. Sales rose sharply after the acquisition, fueled by the K-beauty boom.

In 2023, VIG Partners also implemented a bolt-on strategy by acquiring Nacific, a cosmetics brand known for its "Yok Serum." The company expanded its business beyond its traditional strengths in shampoo and household goods to include basic and color cosmetics.

Given the business expansion and the K-beauty boom, The Skin Factory's sale price is expected to far exceed several hundred billion won. Some believe it would be better to wait and sell when sales are maximized, given the steep growth trajectory of K-beauty.

A VIG Partners representative stated, "Three or four years ago, we focused on maximizing corporate value and often decided to wait if the price was not right, but recently we have revised our M&A strategy. If the price is reasonable and we can deliver satisfactory returns to our limited partners (LPs), we will proceed with a sale. This is because the importance of the DPI (Distributions to Paid-In) metric has increased."