This article was published on Oct. 28, 2025, at 2:02 p.m. on ChosunBiz MoneyMove.
European private equity firm CVC Capital's formation of a continuation fund for travel and leisure platform Yeo-gi Otta is proceeding smoothly. Continuation funds often come with conflicts of interest, but they are known to more easily attract new limited partners (LPs) thanks to relatively low valuations.
According to the investment banking industry, CVC Capital is transferring the equity in Yeo-gi Otta it holds through its existing Asia Fund IV to a continuation fund created jointly by Asia Fund VI and global investor HarbourVest Partners. The transfer process is expected to be completed this year.
A continuation fund is an investment technique that raises a new fund by recruiting new LPs to hold a specific asset longer, and moves the existing asset into that new fund. Typically, private equity firms realize returns by selling or through an initial public offering (IPO), but if those routes are not feasible or the asset's growth prospects are large, they pursue the formation of a continuation fund.
Continuation funds rarely proceed to actual formation because of conflicts of interest. The fund manager, the general partner (GP), must sell the asset to the existing fund's LPs at the highest possible price to realize revenue. At the same time, the new fund's investors expect to buy the asset at the lowest possible price so they can anticipate higher returns later, creating a contradiction.
CVC Capital appears to have succeeded in attracting new LPs by promoting a low valuation. The enterprise value assigned to Yeo-gi Otta in this continuation fund formation process is about 1.1 trillion won. Given that this year's earnings before interest, taxes, depreciation and amortization (EBITDA) are estimated at the 70 billion won range, it is considered inexpensive. It is even lower than the company valuation of 1.2 trillion won at the time of the 2022 fundraising.
In 2019 CVC Capital purchased 45.1% of Yeo-gi Otta's equity held by the representative and 26.4% of the equity from Withweb, JKL Partners and others. At that time Yeo-gi Otta's total enterprise value was valued at about 400 billion won. After some paid-in capital reductions and adjustments, it now holds 80.8%.
After CVC Capital's acquisition, Yeo-gi Otta showed growth. Yeo-gi Otta recorded revenue of 68.6 billion won and an operating loss of 9.9 billion won in 2018, the year before the CVC Capital acquisition, and posted revenue of 248.7 billion won and operating profit of 56.5 billion won last year.
Building on that growth, the company selected global investment bank Merrill Lynch as lead underwriter early last year to pursue a sale, but it failed to find a sincere buyer. At the end of last year it dramatically increased the number of shares through a stock dividend that allocated 17 shares per 1 share as a preparatory step for an IPO.
An industry source in investment banking said, "A sale or IPO of Yeo-gi Otta is not easy right now, and because the company's value has risen substantially since the initial investment, existing LPs have little incentive to oppose the formation of a continuation fund," and added, "From the perspective of new LPs, it likely looked inexpensive relative to results compared with other platforms such as Yanolja."