BRV Capital Management has unexpectedly withdrawn its decision to invest in South Korean auto parts company Myoung Shin Co., Ltd.

BRV Capital Management has recently decided not to invest in Myoung Shin and notified the company, sources familiar with the matter said on Wednesday.

BRV Capital Management had reportedly decided to invest approximately 120 billion won in the auto parts company and had conducted due diligence. Progress has been reportedly made, with Yoon Kwan, general partner at BRV Capital Management, directly discussing with executives of the company. Yoon is also a son-in-law of Koo Bon-moo, the late chairman of South Korean conglomerate LG Group. BRV Capital Management was expected to buy convertible preferred stock or convertible bond issued by Myoung Shin or its associates.

The process has been halted all of a sudden. An investment banking industry source said that BRV Capital Management has suddenly decided not to invest in the company. “BRV Capital Management has reversed its decision, saying that limited partners who invested in its blind-pool fund may dodge capital calls amid the outbreak of the COVID-19,” said the source.

The issue related to capital calls has been a concern since BRV Capital Management first discussed the investment. This is because Chinese and Taiwanese funds were involved in the blind-pool fund formed by BRV Capital Management. China’s foreign exchange regulator State Administration of Foreign Exchange (SAFE) declared in 2018 that it will strictly control capital flight from China to other countries by 2020.

Yet, some industry observers find BRV Capital Management’s decision unconvincing. An M&A industry source said that BRV Capital Management dispelled any worries about the capital call since the early stage of the planned investment. “There is no possibility that BRV Capital Management, which is a global investor, can’t make investment due to problems related to capital calls,” a BRV Capital Management official said at that time.

BRV Capital Management is also facing criticism for its unilateral decision. The company is reportedly seeking other investors to fill the investment vacuum left by the BRV Capital Management’s latest decision.

BRV Capital Management is well known in the domestic market having invested in several domestic companies including Daesung Industrial Gases and EcoPro GEM. It also invested last year in, Shinsegae Group’s online shopping platform, in a partnership with Hong Kong-based PE firm Affinity Equity Partners. (By reporter Kim Byung-yoon)