Private Equity Fund (PEF) management companies have repeatedly acquired skin beauty and medical device companies, only to voluntarily delist them afterward. While voluntary delisting is a strategic choice for PEFs to enable flexible management activities and quick decision-making, individual investors express dissatisfaction as they lose promising stocks.
PEF management company VIG Partners announced on the 18th that it will acquire VIOL through its special purpose corporation (SPC), Vienna Investment Purpose Corporation, and will delist the company via public stock purchase.
VIOL, established in 2009, is a beauty medical device corporation listed on the KOSDAQ market in 2020. It specializes in radio frequency (RF)-based devices and its major products include micro needle RF, monopolar RF, and high-intensity focused ultrasound (HIFU)-based devices.
Since entering the KOSDAQ, VIOL has shown rapid growth. In the last three years, its standalone annual revenue grew from 31.1 billion won to 42.5 billion won, and then to 58.2 billion won. During the same period, operating profit increased from 12.9 billion won to 22.3 billion won, and then to 36.1 billion won. In early 2023, VIOL's stock price, which was below 5,000 won, rose to 11,200 won as of the closing price on the 17th of this month.
Given this situation, individual investors are expressing disappointment over VIG Partners' decision to pursue delisting. In particular, as delisting companies frequently emerge from the beauty and medical device sectors, investors who have primarily invested in this industry voice their frustrations.
Earlier, domestic private equity firm Hahn & Company acquired the medical device company Lutronic in June 2023 and voluntarily delisted it through a public stock purchase in October of the same year. Last year, the French private equity firm Archimede also acquired JC Medical and delisted it in November of the same year. Previously, the medical device company Iruda was also delisted after being acquired by CLASSYS.
Similar events have occurred in unlisted companies as well. Private equity fund management firm Premier Partners acquired the unlisted company Baim and has undergone procedures to delist electronic securities. Once electronic securities are delisted, they can only be traded in physical securities. This is essentially a measure similar to the delisting of listed companies.
An individual investor noted, "Many of the companies that have become difficult to access due to delisting were recognized as promising businesses representing 'K-beauty'" and added, "For those planning medium to long-term investments, there is bound to be some disappointment."
Removing acquired companies from the stock market enables PEFs to make decisions more quickly and avoid burdens related to information disclosure obligations or stock price management.
This trend of delisting can, in the short term, provide opportunities to sell held stocks at prices higher than the market price. However, as attractive stocks disappear from the market and voluntary delistings continue, investors will inevitably have fewer choices. If they do not respond to public purchases, they will need to engage in over-the-counter transactions, complicating stock trading.
An individual investor commented, "I cannot shake the impression that private equity funds are trying to monopolize promising beauty and medical device companies in the country" and added, "It seems that now the only companies worth investing in are CLASSYS and Wotech."
Park Yong-lin, senior researcher at the Capital Market Research Institute, also projected in a report last January that "the trend of increasing delistings in Korea is likely to continue for the time being due to changes in the investment environment surrounding private equity funds."