Key Takeaways
- • VIG Partners acquired a 47.09% stake in aircraft parts manufacturer Yulgok from the JKL Partners-WJ Private Equity consortium, valuing the company at low-to-mid 400 billion won ($290 million) enterprise value.
- • JKL Partners and WJ Private Equity are poised to realize over 3x return on their principal after holding the investment for six years, despite timing their initial 2019 acquisition at peak company earnings.
- • The consortium's 2019 entry proved poorly timed, as COVID-19 pandemic immediately devastated aviation demand, cutting Yulgok's sales nearly in half from 110.3 billion won (2019) to 56.4 billion won (2020) and swinging the company to a 6.9 billion won operating loss.
- • The transaction reflects confidence among PE investors in aviation sector recovery, as commercial aircraft demand rebounds and airlines resume aircraft orders following pandemic disruptions to Boeing and Airbus production schedules.
Summary
VIG Partners has signed a share purchase agreement to acquire a controlling stake in Yulgok, a South Korean aircraft parts manufacturer, from the consortium of JKL Partners and WJ Private Equity. The transaction values Yulgok's enterprise at low-to-mid 400 billion won (approximately $290 million), according to investment banking sources. VIG's acquisition includes a 47.09% stake held by the JKL-WJ consortium as well as a portion of shares from founder and CEO Wi Ho-cheol.
The exit marks a significant victory for JKL Partners and WJ Private Equity, which are positioned to recover more than three times their principal investment after holding the company for over six years. The consortium's original 31.25% stake acquisition in 2019 proved strategically challenging, as it coincided with Yulgok's peak earnings period—the company reported 2019 sales of 110.3 billion won with operating profit of 16.3 billion won on a standalone basis. The timing placed the consortium at the highest point of company valuation, an unfavorable entry point that unfolded worse than projected.
The COVID-19 pandemic struck almost immediately after the consortium's acquisition, triggering a severe contraction across the aviation industry. Border closures caused passenger demand to collapse, leading airlines to defer new aircraft orders. Both Boeing and Airbus subsequently cut production sharply, with downstream effects spreading throughout the parts supply chain. Yulgok's revenue contracted dramatically to 56.4 billion won in 2020, while the company swung to an operating loss of 6.9 billion won—a stark reversal from profitability. The consortium held through this extended downturn, ultimately benefiting from the subsequent recovery in aviation demand as commercial travel and aircraft orders rebounded. The VIG Partners acquisition signals renewed institutional confidence in the aircraft parts sector's sustainability and growth trajectory.
The exit marks a significant victory for JKL Partners and WJ Private Equity, which are positioned to recover more than three times their principal investment after holding the company for over six years. The consortium's original 31.25% stake acquisition in 2019 proved strategically challenging, as it coincided with Yulgok's peak earnings period—the company reported 2019 sales of 110.3 billion won with operating profit of 16.3 billion won on a standalone basis. The timing placed the consortium at the highest point of company valuation, an unfavorable entry point that unfolded worse than projected.
The COVID-19 pandemic struck almost immediately after the consortium's acquisition, triggering a severe contraction across the aviation industry. Border closures caused passenger demand to collapse, leading airlines to defer new aircraft orders. Both Boeing and Airbus subsequently cut production sharply, with downstream effects spreading throughout the parts supply chain. Yulgok's revenue contracted dramatically to 56.4 billion won in 2020, while the company swung to an operating loss of 6.9 billion won—a stark reversal from profitability. The consortium held through this extended downturn, ultimately benefiting from the subsequent recovery in aviation demand as commercial travel and aircraft orders rebounded. The VIG Partners acquisition signals renewed institutional confidence in the aircraft parts sector's sustainability and growth trajectory.
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