By Asian Venture Capital Journal
It follows the KRW380 billion purchase of UBase, Korea’s largest call center and telemarketing services provider and a joint investment of KRW1 billion with BRV Capital Management in the Shinsegae retail group’s e-commerce business. The latter transaction was provisionally agreed in January of last year and then signed at the end of October.
These deals – each of which was sourced on a proprietary basis – account for three of the first four from Affinity’s fifth pan-Asian fund, which closed at the hard cap of $6 billion at the end of 2017. The other investment is a $220 million commitment for a 20% interest in a Thailand-based hospital chain. That transaction closed in February, according to a source familiar with the situation.
Affinity will take a 61.1% stake in ServeOne. S&I Corporation, a construction and facilities management business under LG, will hold the rest, the parent company said in a filing. The divestment was driven by mounting regulatory scrutiny of intra-group deals. ServeOne generated KRW6.9 billion in revenue in 2017, LG’s annual report shows, but 78% of this came from other LG subsidiaries.
ServeOne operates an online mall through which customers – in Korea, China and Vietnam – can order tools and construction materials, electrical devices and replacement parts, industrial cleaning materials, and office supplies. It also has a logistics business that handles deliveries. One of Affinity’s goals is to diversify the customer base.
The PE firm has adopted a similar partnership structure on other deals involving chaebol groups. In 2013, the GP took a majority stake in Leon Entertainment, a subscription-based music streaming service, with previous owner SK Group retaining a minority interest. It exited to Kakao Corporation less than three years later, securing a more than 6x return.
By contrast, UBase is more of a traditional succession planning transaction. Affinity acquired a majority position from the founder, but he remains involved in the business, and the bulk of the capital will be used to drive growth.
The final deal from Fund IV was the A$612 million ($446 million) privatization of Australia-listed debt and trade finance provider Scottish Pacific. It was announced last September, with the board immediately suggesting that shareholders accept the bid, and closed in December.