This article was displayed on the ChosunBiz MoneyMove (MM) site at 4:15 p.m. on Feb. 11, 2026.
JKL Partners, a domestic private equity fund (PEF) manager, will recoup the funds it invested in YG-1, the world's No. 1 manufacturer of cutting tools. As recently as early last year, the stock traded below the investment price and showed a valuation loss, but in just one year the share price nearly doubled, suggesting the firm has entered the exit process.
According to the investment banking (IB) industry on the 11th, JKL Partners converted all 3,619,909 shares of YG-1 redeemable convertible preferred stock (RCPS) it held into common stock. The conversion price is 5,525 won per share. Based on the closing price that day (10,020 won), the value is about 36.3 billion won. It has been five years since JKL Partners invested 20 billion won in YG-1 in 2020, and it has secured a valuation gain of about 81% of principal.
It is a dramatic turnaround considering that as recently as a year ago the stock price was below cost and stuck in a valuation-loss range. In Jan. last year, as YG-1's stock slump persisted, JKL Partners opted to amend the shareholder agreement with Chief Executive Song Si-han, the major shareholder, instead of exercising the early redemption right (put option). At the time, it extended the put option period and deleted the major shareholder's call option, while adding an "earn-out" clause to split 35% of profits exceeding an internal rate of return (IRR) of 8% with the major shareholder. The strategy aligned investor and management interests around the shared goal of lifting the share price, and it paid off.
JKL Partners' internal rate of return (IRR) from this common-share conversion is estimated at about 12.24%. As a result, the newly added earn-out clause is triggered, and the major shareholder side is also set to receive a sizable payout. The valuation applying an 8% annual compound rate is about 29.73 billion won, and about 2.29 billion won—35% of the profit portion exceeding that amount (about 6.54 billion won)—is expected to be paid to the major shareholder side. In the end, JKL Partners is expected to book a gain of 13.9 billion won.
YG-1's share price moved sideways in the 5,000-won range until early Jan. this year, then climbed sharply on the back of record results and industry tailwinds recently announced. On a consolidation basis last year, net profit jumped 49.1% on-year to 25.3 billion won, and surging demand for high-precision cutting tools driven by expanded investment in artificial intelligence (AI) servers and semiconductor facilities, plus a recovery in the aerospace industry, proved decisive. In particular, analysts say the "post-pandemic" demand surge scenario that JKL Partners predicted at the time of its reinvestment in 2020—after having completed an invest-and-exit cycle in 2015—has materialized in five years.
However, the overhang (potential selling volume) from this common-share conversion is cited as a variable for the stock's future path. The converted shares amount to about 10% of total shares outstanding. If that volume hits the market all at once, a short-term supply-demand shock is inevitable. But the industry expects JKL Partners to pursue an exit that minimizes market impact, such as through a block deal (after-hours bulk trade), rather than selling in the open market.