In a recent fireside chat, Jason Shin, Co-founder and Senior Partner of VIG Partners, delved into the intricacies of mid-market investing in Korea. The discussion, rich with insights, covered a range of topics pivotal for understanding the evolution and current dynamics of the private equity landscape in Korea.

Background and VIG Partners Genesis: Jason Shin shared his journey from being an investment banker to co-founding VIG Partners in 2005, marking the inception of the first buyout fund in Korea. Starting with a fund size of $500 million, VIG Partners has grown significantly, with their fourth fund closing at $820 million and plans underway for a fifth fund targeted at $1 billion.

Strategic Focus and Market Positioning: Shin emphasized VIG Partners’ strategic focus on mid-market, buyout-focused investments, highlighting the firm’s balanced investor base between Korean and international limited partners (LPs). Despite opportunities to scale up, VIG has maintained its niche in the mid-market segment, driven by a clear strategy and the unique positioning that differentiates them from larger global funds.

Evolution of the Korean Private Equity Market: Over the years, the Korean private equity market has matured, with increasing familiarity and success of large-cap buyouts paving the way for mid-market opportunities. Shin noted a shift in the perception and understanding of Korea’s potential among international investors, which has evolved from skepticism to a keen interest in the mid-market segment.

Challenges and Opportunities: Addressing challenges, Shin pointed out the initial hurdles in establishing trust with corporate owners in Korea and the evolving questions from LPs regarding exit strategies and the visibility of successful exits. He also highlighted the broadening spectrum of potential buyers, including smaller strategic players and conglomerates, which has expanded significantly from the early days of VIG.

Innovative Deal Sourcing and Exit Strategies: Shin proudly mentioned VIG’s track record of proprietary deals, avoiding competitive auctions, and focusing on under-the-radar opportunities that allow for value creation and successful exits. VIG Partners has completed numerous full exits, demonstrating their capability to not only grow businesses but also to achieve profitable exits, a testament to their strategic acumen and market understanding.

Future Outlook and Expansion Plans: Looking ahead, VIG Partners is exploring expansions into other asset classes like opportunistic credit and potentially real estate and venture capital, ensuring a clear separation of teams to avoid conflicts of interest. This strategic diversification is aimed at leveraging their established platform to tap into new opportunities while staying true to their core investment philosophy.

In conclusion, Jason Shin’s discussion provided a comprehensive overview of VIG Partners’ strategic journey in the Korean mid-market investment space, highlighting their adaptability, strategic foresight, and commitment to delivering value to their investors and stakeholders. As they prepare for their fifth fund, VIG Partners stands as a pivotal player in Korea’s vibrant private equity sector.

Key timestamps:

00:09: Introduction
01:48: Growth and Expansion of Funds
02:38: Factors Influencing Fund Size
04:19: Evolution of Fund Size
05:49: Balancing Korean and International LPs
06:57: Commitment to Mid-Market Space
07:23: Interest in Korean Mid-Market
08:42: Changing Perception of the Korean Market
10:52: Shift in Investor Concerns
11:34: Challenges with Exits
12:37: Deal Flow and Track Record
14:04: Proprietary Deals and Entry Valuation
15:33: Capability for Building Companies
16:06: Proven Track Record in Exits
17:27: Changes in Exit Environment
21:13: Evolution of Financing Landscape
22:49: Expansion of Investment Strategy
25:15: Consideration of New Asset Classes
26:58: Exploring Secondary Market and Continuation Fund
28:04: Impact of Interest Rates on Private Equity
29:14: Composition of Investor Base