The headquarters of Yulgok [Yulgok website]
The headquarters of Yulgok [Yulgok website]

VIG Partners has been selected as the preferred bidder to acquire Yulgok, an aerospace components manufacturer. The domestic private equity firm edged out formidable rivals — including Stic Investments, Anchor Equity Partners and KCGI — by emphasizing defense security credentials, business continuity and a post-acquisition growth strategy.

According to investment banking industry sources, the JKL Partners–WJ Private Equity consortium designated VIG Partners as the preferred bidder for Yulgok on Tuesday. The transaction covers the consortium's entire 47.09 percent stake as well as a portion of the shares held by founder and current largest shareholder Wi Ho-cheol, who owns 47.23 percent.

The exact size of the residual stake Wi will retain is still under discussion and will be finalized through a shareholders' agreement with VIG Partners. Yulgok's enterprise value on a 100 percent equity basis is cited at around 400 billion won ($272 million).

Industry observers say the outcome was decided less by who offered the highest price than by the qualitative strength of each bid. Defense security — directly tied to national security and supply chain integrity — and business continuity, as demanded by the founder and global clients, are seen as the factors that shifted the deal's dynamics.

Yulgok is a key partner of Korea Aerospace Industries (KAI) and supplies components to the Boeing and Airbus supply chains, while also operating in some defense business segments. The sellers are understood to have preferred a domestic fund over foreign capital, given the sensitive nature of the defense operations.

"Given the nature of the defense and aviation parts business, the vetting process for overseas capital is inevitably stringent," an investment banking industry official said. "The sellers would have been thinking carefully about how to block risks such as technology leakage and maintain long-term partnerships with their clients." VIG Partners' accumulated trust and deal experience as a purely domestic fund are seen as decisive advantages in securing preferred bidder status.

VIG Partners also held an edge in terms of post-acquisition value enhancement potential. The sellers favored a partner capable of driving genuine growth at the acquired company.

VIG Partners won positive marks from the sellers by presenting an aggressive capital deployment and growth strategy, including additional paid-in capital increases and bolt-on acquisitions. Its deep understanding of the aviation industry, built through managing existing portfolio companies such as Eastar Jet, is also cited as a key competitive strength.

The ownership structure was designed with business continuity in mind from multiple angles. The deal involves the acquisition of both the consortium's stake and a portion of founder Wi's shares, with Wi retaining a residual interest and continuing to participate in management and key decision-making. The arrangement reflects requests from global clients concerned about his absence and Wi's own desire to remain involved in running the company — a recognition of the central role he has played in winning project contracts.

The acquisition will be carried out through VIG Partners' fifth blind fund. Once the Yulgok deal closes, the fund's deployment rate is expected to reach approximately 80 percent. Industry watchers expect VIG Partners to move soon after that milestone to begin raising its sixth blind fund in earnest.


an@heraldcorp.com