South Korea’s Glenwood Private Equity Co. is set to increase a blind fund to 1.5 trillion won ($1 billion) as pension funds at home and abroad, including the country’s National Pension Service (NPS), are interested in making capital commitments.
Glenwood PE plans the first close of its No. 3 blind fund worth up to 1 trillion won next month, investment banking industry sources in Seoul said on Thursday.
The buyout firm aims to ramp up the fund to 1.5 trillion won by the first half in response to requests from limited partners, according to the sources.
The NPS, the world’s third-largest pension fund, and the Korean Teachers’ Credit Union (KTCU), which invested in Glenwood PE’s first and second blind funds, are in the final stages of considering commitments to the third.
Pension funds in North America and Europe also sought commitments.
HIGH RETURNS
Glenwood PE liquidated the No. 1 blind fund established in 2018 with an annual average return of 29.1%. The firm increased the fund size to about 1 trillion won from the initial 450 billion won with a multiple on invested capital (MOIC) of 2.2 times and distributed it to investors.
The firm logged an internal rate of return (IRR) of more than 20% from all the investments of the No. 1 blind fund in CJ Olive Young Corp., PI Advanced Materials Co., LX Glas Corp., Haeyang Energy Co., Seorabeol City Gas Co. and others.
Most of the investments, excluding the case of CJ Olive Young, the leading South Korean beauty store chain, are carve-out deals, which involve a parent company selling a minority stake in a subsidiary to outside investors, effectively establishing the subsidiary as a standalone company.
Carve-outs allow companies to capitalize on non-core business segments and can offer the potential for growth and value for both the selling company and the buyer.
CARVE-OUTS
Glenwood PE established in 2014 specializes in a carve-out strategy, which involves acquiring non-core businesses and increasing their enterprise values to sell them. The firm resumed investments and employment during the process, raising portfolio values.
Glenwood PE set up the second blind fund of 900 billion won last year and invested in CJ Olive Young, Invitros, SK Pucore Co., Techcross Environmental Services Inc. and others.
Most limited partners in South Korea, including the NPS, selected Glenwood PE as an excellent asset manager, which allows the firm to attract commitments from them without competition.
By Jun-Ho Cha
chacha@hankyung.com
Jongwoo Cheon edited this article.
