Stick Investment Faces Deepening Challenges... No Exits from Fund II as CHAEVI Exit Is Also Delayed

Seven Years Since Fund Inception, Yet Zero Exits
Portfolio Struggles: Musicow, Juvis Diet, and Grab Face Challenges
Even CHAEVI, Once Expected to Deliver an Exit via IPO, Now Faces Mounting Uncertainty

The flagship blind fund of domestic large private equity fund (PEF) manager Stick Investment, "Opportunity Fund II," is facing growing exit pressures as it enters a long-term holding phase for its investment portfolio. Nearly eight years have passed since its inception, but the fund has yet to deliver any notable exit results, and major limited partners (LPs) are reportedly ramping up the pressure.

According to the investment banking (IB) industry on April 22, Stick Investment's Opportunity Fund II, which was launched in 2019 with approximately 1.2 trillion won, has still not completed a single exit. Given that the typical investment and exit cycle for PEFs is around 5 to 7 years, this is considered a significant delay.

This fund invested in a number of growth-oriented assets, including diet consulting company Juvis Diet, the music copyright platform Musicow, Grab—the leading mobility application in Southeast Asia—and the electric vehicle charging infrastructure company CHAEVI. However, since each portfolio company has failed to meet performance expectations, the exit process is facing difficulties.

Juvis Diet has seen its growth slow due to intensifying competition in the weight management market and weakened consumer demand. Musicow’s investment appeal has also diminished due to regulatory issues and controversy over its business model. Grab, which grew into a "super app" in Southeast Asia, has experienced sluggish share prices since its IPO, delaying the timing of capital recovery.

Even CHAEVI, which had raised some exit expectations, now faces heightened uncertainty around its exit. Despite reporting cumulative losses exceeding 180 billion won, CHAEVI proposed a valuation of over 700 billion won during its IPO process, reflecting high future growth potential. This sparked controversy over inflated valuations. In particular, criticism arose that the IPO was a "survival listing" aimed at helping the largest shareholder avoid put options (stock buyback rights) and enabling financial investors (FIs) like Stick Investment to recover their investment, with additional concerns about a significant overhang (potential sell-off volume) risk immediately after listing.

Amid concerns that such a listing does not align with the government's capital market reform policy, FIs including Stick Investment had no choice but to make major concessions. They decided not to exercise their put options even if the public offering price falls below a certain threshold, and added safeguards by stipulating a six-month lock-up period after listing and further restrictions on on-market sales in the securities registration statement. As a result, the timing for Stick Investment to recover its investment in CHAEVI is expected to be delayed even further.

It is rumored that mounting exit delays are significantly increasing pressure from LPs. It is reported that major institutional investors such as the National Pension Service and the Teachers' Pension Fund are involved in Opportunity Fund II. Given that fundraising began around 2018, the lack of results for over eight years could lead to even greater pressure in the future.

Industry observers note that the fund's high concentration in growth-oriented investments has exposed its limitations. With exit momentum currently constrained, Stick Investment is expected to face ongoing challenges. An industry insider commented, "Stick Investment now faces multiple tasks, including the need to quickly deploy the dry powder (undrawn capital) of its recently launched Fund III," adding, "Since they also need to focus on internal restructuring following a change in the largest shareholder, it must be a particularly hectic time for the firm."

This content was produced with the assistance of AI translation services.