Private equity fund (PEF) manager JC Partners said on the 22nd that it recently decided to continue holding management control of Goodrich, a general insurance agency (GA). JC Partners plans to set up a continuation fund related to Goodrich, exit the existing fund, and then raise new limited partners to form a new fund.
A continuation fund is a strategy used when the asset's revenue-generating potential is high and managers and investors want to hold it long term. It is distinguished from a share deal, which trades "fund equity," in that the asset within the fund is transfered to a new fund. Specific amounts were not disclosed. JC Partners is said to prefer insurers as new fund investors with whom it can build strategic partnerships.
A JC Partners official said, "If we choose a continuation fund at the sale price level currently being discussed, we can offer a satisfactory exit opportunity to the limited partners of the existing project fund," and added, "At the same time, for SIs and FIs that had been interested in Goodrich, it could be a more attractive option than a simple sale because it opens a new investment opportunity."
This push is known to have been driven largely by a consensus between major shareholder JC Partners and existing shareholder CEO Han Seung-pyo. As the acquisition of Goodrich by JC Partners passed the three-year mark this month, the firm conducted financial due diligence through Deloitte Anjin. As this became known, sale rumors surfaced in the market, but during discussions between the two sides, they reportedly agreed to continue management rather than sell.
According to JC Partners, the company and CEO Han Seung-pyo judged that the GA market and Goodrich have high additional growth potential, and discussions on a continuation fund began naturally. With CEO Han committing to a subordinated investment in the new fund, the future direction was set, the company said. CEO Han will invest more than 30% of the new fund's total size as subordinated capital.
A JC Partners official said, "We quickly finalized our position to prevent unnecessary debate and the amplification and reproduction of unconfirmed information (sale rumors)," and added, "The growth Goodrich achieved during the investment period was clearly a result worthy of market attention, and going forward, we will complete a structure that allows us to grow together with a strategic partner who will help redraw the insurance market while we look to even greater potential."