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PAG exits from only Korean portfolio company at discount

A promotional photo of
A promotional photo of "Tobot" toy products by Young Toys (Courtesy of Young Toys)
Hong Kong-based private equity investor PAG Asia Capital exited from Korean toy maker Young Toys by selling its entire stake for some 150 billion won ($127 million) to an investor consortium led by local book publisher MiraeN.

The transaction was closed earlier last week, according to deal adviser BDA Partners, after the proposed buyer and seller inked a sales and purchase agreement for 100 percent stake in Young Toys in August. MiraeN declined to comment on deal terms.

“We’re proud to have advised PAG on its successful exit from Young Toys,” said Howard Lee, managing director and head for Seoul at BDA Partners. “This transaction is the first Korean transaction to have been revived after being put on hold due to COVID-19 pandemic in Korea.”

Young Toys was PAG’s only portfolio firm based in Korea before the deal.

As a result, Young Toys is now controlled by Korea-domiciled shareholders for the first time in eight years. Young Toys is Korea’s leading toy manufacturer and distributor by market share that is popular for flagship homegrown toy brands such as Tobot, Secret Jouju and Kongsuni.

Young Toys‘ majority stake was handed over to Hong Kong-based PE Headland Capital Partners in 2012, until it divested the stake to fellow Hong Kong firm PAG in 2015.

PAG, formerly known as Pacific Alliance Group, sold Young Toys at a lower price than it had paid in 2015 for the takeover, at 220 billion won.

Following the acquisition via the PAG Asia I fund, PAG has brought a combined 70.3 billion won in dividend payouts since 2016, disclosures showed.

PAG has been in talks with the new investor group, composed of MiraeN and Seoul-based financial investors Nvestor and Corstone Asia, since October last year.

Young Toys in 2019 recorded a 9.8 billion won operating profit, down over 80 percent on-year. Its net profit came to 3.2 billion won, shrinking by over 90 percent.

PAG, meanwhile, has been eyeing a larger presence in the Korean real estate investment scene. PAG acquired luxury hotel Grand Hyatt Seoul by partnering with Seoul-based Inmark Asset Management in December 2019. Also in April, PAG closed a $2.75 billion real estate fund to invest in opportunistic properties in Asia-Pacific countries including Korea.

By Son Ji-hyoung (
Korea Herald Youtube