Private equity (PE) firm JKL Partners will reinvest in cutting tools manufacturer and distributor YG-1 by acquiring redeemable convertible preference shares (RCPS) worth 20 billion won ($18 million), industry sources said on Friday (December 11).

The RCPS would give the PE firm about a 10% stake if converted. The transaction is likely to be closed this coming Friday (December 18).

JKL Partners will finance the investment through its fourth blind-pool fund, which has invested in Donghae Machinery & Aviation, Krafton, GS ITM, Lotte Non-Life Insurance, Yulkok and Megazone Cloud. The fund will invest 80% of its committed capital after the latest investment.

YG-1 is the world’s number one end mill manufacturer of cutting tools in terms of market share. Nearly 80% of its revenue comes from overseas markets.

The firm recorded revenue of 428 billion won and earnings before interest, tax, depreciation and amortization of 52.7 billion won last year, and is steadily generating cash despite the Covid-19 pandemic. It is targeting revenue of 5 trillion won by 2035.

JKL Partners, which invested 27.5 billion won in the company in 2015 and retrieved most of its investments, has decided to make an additional injection to bet on the company’s further growth potential.

“PE firms have started to make investments in companies which could sharply improve their financial performances after Covid-19,” said a source. (Reporting by Ik-hwan Choi)