Affirma Capital to liquidate first fund

Singapore-headquartered private equity firm Affirma Capital is set to liquidate its first fund with the PE firm selling its stake in Daelim Motor Co Ltd.

Affirma Capital has decided to sell its stake in Daelim Motor to Daelim Industrial Co Ltd, according to sources on July 21. Daelim Motor is the last portfolio company in the Korean unit of Affirma Capital’s first fund. The deal is expected to close soon.

Affirma Capital acquired more than 9.2 million shares of Daelim Motor through a rights offering in October 2011. At that time Affirma Capital made investments Daelim Motor through its Korean unit’s first and second blind-pool funds, AscentaⅠ and AscentaⅡ, purchasing a combined 41% stake in the company.

In November 2017 Daelim Motor spun off its motorbike business and newly established a company called Daelim Motorcycle Co Ltd. Through the process Affirma Capital became a shareholder with a 41% stake each in Daelim Motorcycle and Daelim Motor.

Affirma Capital will fully exit its investment in the portfolio as A2 Partners and Rhinos Asset Management decided to take over Daelim Motorcycle in June, followed by its latest sale of Daelim Motor shares to Daelim Industrial.

Affirma Capital invested 71 billion won ($59 million) in Daelim Motor in October 2011. Considering its partial exit and its sale of the company, the PE firm has generated a money multiple of approximately 1.5 times through the Daelim Motor investment.

Affirma Capital has formed its first and second fund as a parallel fund. The 102 billion-won first fund and 260 billion-won second fund have invested in Doosan Industrial Vehicle Co Ltd, Construction Products Holding, Daelim Motor and Smoothie King Korea.

With its exit from the last portfolio company, the first fund will generate about a 2 times return. The first fund has invested approximately 83 billion won in four companies and collected 165 billion won. The fund is expected to liquidate in September, followed shortly by the second fund. The second fund is expected to generate a return similar to that of the first fund.

Affirma Capital is currently raising funds for its 500 billion-won fifth fund.

Affirma Capital has been spun out of Standard Chartered Bank after a complex three-year process involving over 50 investments across six regions. In making investments, Affirma Capital not only uses each region’s individual funds backed by local institutional investors but also its Global Fund series formed mainly for principal investments, capitalizing on its global pool of capital. (Reporting by Hee-yeon Han)