[Edaily Marketin Reporter Song Seung-Hyeon ] LX Investment (LX Invest), now in its 11th year since its founding, is increasing its presence in the mid-sized private equity (PE) market. The firm, which began by investing in minority stakes in consumer goods companies, is now viewed as having expanded its investment scope to become a buyout firm specializing in the materials, parts, and equipment manufacturing sector after successfully acquiring and divesting a controlling stake in SSP, a semiconductor back-end equipment manufacturer.

According to the investment banking (IB) industry on the 11th, LX Invest is an asset management firm established in April 2015, primarily by personnel who previously led technology finance at SK Securities’ PE Division. It is an investment arm of X Alliance (formerly Taejin International), which owns the mass-market fashion brand Louis Quatorze. CEO Kim Chung-won, who took office in February 2020, oversees the firm. To date, the firm has raised nine funds, with cumulative assets under management (AUM) totaling 727 billion won and a total of 26 investments. Its cumulative internal rate of return (IRR) stands at 15.6%.

The management team is composed of professionals with backgrounds in both industry and finance. The two pillars of the firm are Division Head Kim Sang-jun, who started in the planning department at X Alliance and later served as CFO of the French subsidiary where he was responsible for post-merger integration (PMI), and Division Head Jeong Si-wan, who joined the firm as part of its first-ever open recruitment after working at an international organization. The investment team consists of around 10 members, including the CEO, operating under a structure where a small team handles everything from deal sourcing to funding and PMI.

LX Invest primarily employs a dual-track approach, combining 100% buyouts with minority and mezzanine investments utilizing redeemable convertible preferred shares (RCPS) and convertible bonds (CBs). In the early stages, the focus was on the latter. In late 2015, the firm invested 60 billion won—combining existing shares and convertible bonds—in JNTC, a 3D cover glass manufacturer, and recouped its investment after the company’s IPO, generating an IRR of 20.8%. Additionally, the 4 billion won invested in the fashion e-commerce company W Concept Korea in 2016 returned more than double the principal in just over a year. The firm invested 8.5 billion won in TDS Pharm, a patch manufacturer, and sold its entire stake in 2024, recording an IRR of 25.9%. It divested its stake in Korea Gold Exchange 3M, a precious metals distributor, in April of last year—six years and six months after the initial investment.

It was SSP that truly established a strong presence in the market. In 2022, LX Investment formed a consortium with M Capital (now MG Capital) to acquire 100% of SSP’s shares for approximately 180 billion won. This was the first major buyout in which management control was acquired solely by financial investors, without any strategic investors (SIs). Immediately after the acquisition, the semiconductor cycle turned downward, causing revenue to plummet by 39% the following year; however, the company weathered the storm by promoting an internal executive who had long overseen the operations division to CEO and expanding its client base. On the 31st of last month, the firm sold its entire stake to Keystone Partners for 360 billion won; including dividends of 57.02 billion won received during the holding period, the total return amounted to 417 billion won—2.3 times the initial investment.

In the used battery sector, the company opted to directly integrate the value chain. Following the acquisition of pre-processing firm NH Recytech Company, it added post-processing capabilities by acquiring a controlling stake in KOSDAQ-listed Saebitchem for 40 billion won in February of last year. It is reported that Division Head Kim Sang-jun was stationed at the Gimcheon plant two to three days a week to oversee the integration process. Last year, the company expanded its lineup of materials, parts, and equipment by acquiring Deoksan Industries, a refiner of specialty organic solvents for semiconductors, for approximately 130 billion won.

Fundraising efforts also gained momentum. In October 2021, the company formed a 125 billion won eco-friendly blind fund with SK Eco Plant and IBK Capital; it received a commendation from the Deputy Prime Minister for Economic Affairs in April 2022 for executing related investments through this fund. In December 2023, the firm established a 121 billion won export support fund in a co-general partner (Co-GP) structure with IBK Industrial Bank of Korea. This fund attracted both selection as a designated manager for Korea Growth Finance’s Innovation Growth program and an investment from South Gyeongsang Province. In April of last year, it formed an 112 billion won project fund specifically for the acquisition of Deoksan Industries.

Recently, the firm has been expanding into the defense industry. In December 2024, it invested 5 billion won in RCPS into Ains Sky, an aircraft parts manufacturer based in Sacheon, South Gyeongsang Province, and a partner of Korea Aerospace Industries (KAI). That same year, it invested 8 billion won in Coa Automotive, a manufacturer of electric vehicle motor cores, and in July of last year, it invested 12 billion won in IT Sencloit, a cloud systems integration (SI) company.

Industry observers believe that LX Investment’s deal-making power has risen to a new level following the SSP exit. However, since the firm has only been transitioning from minority stakes in consumer goods to controlling stakes in manufacturing companies for three to four years, whether it can achieve a second buyout exit from its holdings in Sabitchem and Deoksan Industries will likely determine the firm’s reputation.