IMM Private Equity CI.

This article was published on Jan. 13, 2025, at 5:02 p.m. on the CHOSUNBIZ MoneyMove site.

The domestic private equity fund manager IMM Private Equity (IMM PE) is seeking to extend the maturity of its third fund, which was established in 2015. The plan is to delay the recovery of investment funds from key investment targets such as K Bank and Able C&C to enhance the fund's revenue.

According to the investment bank (IB) industry on the 13th, IMM PE recently set an internal policy for the maturity extension of 'IM Rose Gold 3' and began the consent process for limited partners (LP). The original maturity, set for the end of January, is planned to be extended by a year to the end of January next year, contingent upon approval from the majority of LPs.

IM Rose Gold 3 is regarded as IMM PE's third blind fund and the first to exceed 1 trillion won, garnering significant attention. It was formed in January 2015 with a scale of 1.26 trillion won, with all of the top domestic LPs including the National Pension Service, the Teachers' Pension, and the Korea Post participating.

IMM PE has made investments across a wide range of sectors, from acquiring management rights of corrugated box manufacturer Taelim Packaging to comic content companies, cosmetics corporations, and banks, without bias toward buyouts or growth capital (minority equity investments). At Taelim Packaging, it even recovered more than double the acquisition price.

Last year, IMM PE hit a home run by selling all of its 6% stake in Woori Financial Group, which it had secured for 450 billion won, for about 650 billion won. However, due to delays in recovering investment funds from the cosmetics company Able C&C, which was identified as part of the initial investment portfolio, it decided to extend the maturity.

Able C&C is noted as the Achilles' heel of IMM PE's third fund. Starting with a buyout of the founder's stake in April 2017, it invested 400 billion won through public buyouts and capital increases to secure a total of 61.52% equity, but the current equity value of IMM PE's stake remains at the level of 110 billion won.

Although it gained popularity with the first-generation road shop Missha, its performance started to decline alongside the acquisition of management rights by IMM PE. It was pushed out by health and beauty (H&B) stores like Olive Young, leading to a reduced market presence, compounded by the effects of the THAAD incident and COVID-19, resulting in a loss of 68 billion won in 2020.

In the meantime, K Bank, which was expected to recover investment funds, also withdrew its plans for an initial public offering (IPO). IMM PE became a major shareholder by participating in K Bank's capital increase in October 2018 and was planning to recover funds post-IPO. However, K Bank opted to withdraw, noting it would be difficult to properly assess its corporate value.

Amid this situation, the industry anticipates that the maturity extension of IM Rose Gold 3 is feasible. Despite the challenges in recovering funds from Able C&C, it has achieved successes in fund recovery from existing portfolios, resulting in cash distributions to LPs surpassing the principal. The DPI was recorded at 108%.

Recently, the growing popularity of K-beauty is positively impacting Able C&C's performance. In particular, Missha's BB cream gained significant popularity in the U.S. market, appearing among Amazon's best-selling products. After losses of 68 billion won in 2020 and 22.4 billion won in 2021, its operating profit turned to a surplus of 10 billion won in 2022. In 2023, it reported an operating profit of 11.4 billion won, and by the third quarter of last year, it had generated 14.1 billion won in operating profit.

Despite the IPO setback for K Bank, fund recovery itself does not seem impossible. Should K Bank ultimately fail to go public, conditions might require financial investors (FIs) to partially purchase the equity they hold or sell K Bank shares to third parties.

An industry source from the IB field noted, 'Given that the DPI showing distributed cash relative to LPs’ investment has surpassed 100%, the consent process for the maturity extension itself should not be difficult,' adding that 'now, the biggest market interest is whom IMM PE will sell Able C&C to and for how much.'