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Private equity

Carlyle Group to exit from Korean OEM apparel exporter in seven years

Aug 21, 2020 (Gmt+09:00)

The Carlyle Group has sold off its stake in South Korea's Yakjin Trading Corp., an original equipment manufacturer (OEM) for global brands such as Old Navy, GAP and Banana Republic, to JS Corporation, divesting of the Korean investment in seven years.

Carlyle has agreed to sell its 70% stake, as well as the remaining 30% stake held by the company's CEO, to the country's OEM handbag maker JS Corp for a combined 14.3 billion won ($12 million), according to JS’s regulatory filing on August 21.

In 2013, the US private equity firm bought the majority stake in the Korean apparel exporter for 204.8 billion won via its Asian growth capital fund. Yakjin also ships clothes to the US department store chain Nordstrom and retailer Walmart under original design manufacturer (ODM) and OEM contracts.

Yakjin’s sales are expected to grow by 5% to 580 billion won this year from 2019, led by growing demand for protective clothing amid the spreading coronavirus. Operating profits increased by 11% year on year from 2018 to 14.5 billion won last year.

Its new owner JS Corp, listed on the Korea Stock Exchange, makes handbags for luxury brands such as Burberry, Coach, DKNY, Guess, Kate Spade, Michael Kors, and Ralph Lauren. Its operating profit reached 11.1 billion won on sales of 253.1 billion won in 2019.

JS expects to utilize Yakjin’s global production and distribution networks to boost its presence in the global luxury market. Yakjin runs factories in Cambodia, Indonesia, Vietnam and Haiti.

“South Korean textile and clothing exporters are in cut-throat competition with exporters from China and developing countries, who are playing catch-up,” said JS Corp’s CEO and Chairman Hong Jae-sung.

“JS Corp and Yakjin Trading hold the top spots in the global ODM market. We will maximize the synergy effects from the merger to grow JS Corp as a top global company.”

Carlyle made the exit in its second attempt. In 2015, it failed to sell Yakjin due to a price difference with a potential buyer.

Still, Carlyle has yet to divest of Topia Education Inc. and FNSTARS, a financial services product sales company. It invested 18.6 billion won in Topia in 2007 and 10.4 billion won in FNSTARS in 2008 through the Asian growth capital fund.

By Jun Ho Cha

Yeonhee Kim edited this article

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