VIG Partners to acquire aviation parts maker Yulgok, signing deal within a month of preferred bidder selection

South Korean private equity fund manager VIG Partners has agreed to acquire Yulgok, a domestic aviation parts manufacturer. The firm signed a definitive agreement within a month of being named preferred bidder, beating out a field of major private equity rivals.

According to investment banking industry sources Thursday, VIG Partners last week signed a share purchase agreement to acquire the 47.09 percent stake held by a consortium of JKL Partners and WJ Private Equity, along with a portion of the 47.23 percent stake held by founder and largest shareholder Wi Ho-cheol, the company's chief executive.

Yulgok's enterprise value was set at 400 billion won ($289 million) on a 100 percent equity basis. The acquisition will be funded through VIG Partners' fifth blind fund. Once the deal closes, the fund's deployment rate is expected to reach around 80 percent, laying the groundwork for the firm to raise its sixth blind fund.

Yulgok is a key supplier to Korea Aerospace Industries and delivers components into the supply chains of Boeing and Airbus, giving it a strong foothold in South Korea's defense and aviation parts industry. The company struggled during the COVID-19 downturn — posting sales of 57.7 billion won and operating profit of 4.1 billion won in 2022 as air travel demand collapsed — but staged a sharp recovery as global aviation conditions normalized, recording sales of 127.4 billion won and operating profit of 15.4 billion won last year.

The final bidding round for Yulgok drew several major private equity managers alongside VIG Partners, including Stic Investments, Anchor Equity Partners and KCGI. VIG Partners ultimately prevailed, earning recognition for its competitiveness on defense-related security and business continuity grounds, and was named preferred bidder in July.

A notable feature of the deal is its co-management structure: founder Wi retains a portion of his shares and continues to lead the company. Wi has long been credited with playing a central role in securing project contracts for Yulgok. Concerns that an abrupt management change could destabilize relationships with global customers such as Boeing and Airbus appear to have shaped the arrangement.

Industry observers say VIG Partners has secured stability in the defense and aviation parts supply chain by crafting a flexible partnership with the founder. With global aviation manufacturing continuing its recovery, analysts expect Yulgok's value-enhancement prospects to gain further momentum.

For the sellers — JKL Partners and WJ PE — the agreement also carries significant weight. The two firms, which invested in Yulgok as a consortium, have now achieved a successful exit. For WJ PE in particular, founded in 2019, the deal marks its first major exit track record, which the market views as a meaningful demonstration of the firm's capabilities as a fund house.