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The former head of private equity at Hyundai Motor Securities is launching a new manager in Boston catering to Korean institutional investors, With Intelligence has learned.

GB Investment Partners, a private equity manager focusing on growth equity and late-stage venture deals in the fintech sector, was founded last month by Ethan Lee, who recently relocated from Seoul to Cambridge, Massachusetts.

The new firm will make investments in equity and mezzanine debt, committing between $100m and $1bn per transaction.

Lee worked for five years at Hyundai Motor Securities, where he invested around $700m in cross-border M&A transactions, including teaming up with Bain Capital on its deal to acquire Toshiba.

Previously, he held senior PE roles at a number of South Korean firms, including Meritz Securities, Dominus Investment, Hanwha Investment and Start Equity Partners.

Working alongside Lee at GBIP are Atlanta-based Jay Kim, a former business development executive at Fitch Ratings, and Seoul-based Shawn Yum, a lawyer focusing on cross-border M&A.

In addition to the founding partners, the firm is looking to make a few more junior hires in its Cambridge office over the coming months.

Speaking to With Intelligence, Lee said that the new firm will initially raise capital exclusively from Korean investors, investing on a deal-by-deal basis through segregated portfolio companies. As the firm builds a track record, it will look to market to US institutional investors.

GBIP plans to close its first deal in Q4 of this year, and has set a target of $500m in AuM by the end of 2023.

Lee said that South Korean investors tend to have a large appetite for private equity, although the country has, until recently, remained a relatively untapped source of capital for US managers.

"Korean capital is getting increasingly active in global private equity markets", said Lee. "Some LPs allocate 20-30% of their portfolios to PE and VC."

With Intelligence has tracked at least 45 active private equity searches from Korean investors in 2022, for a total of around 400bn Korean won($3bn).

Meanwhile, Korean investors have committed at least $2bn to the asset class over the same period, across 36 mandates.

GB Investment Partners, a Boston, US-based private equity firm, is actively exploring equity investment opportunities in the country to clinch the first deal this year, its founder and Partner Ethan Lee said.

The firm, which was established in July by experienced Korean M&A and investment professionals, sees high potential in the evolving US fintech sector and has already been screening several verticals for months, with 8-10 companies in the pipeline.

“We are particularly interested in companies that enable a non fintech business to become a fintech company,” said Partner Jay Kim, underlining it is closely following white label banking platforms.

The company largely focuses on three fintech verticals: 1) neo banks 2) payment services due to the strong e commerce market in the US and market-based lending financing firms 3) business-to-business SaaS for financial management, such as accounts payables.

These areas are its primary interest but its target is not limited to these only, Kim said, adding that it will gradually broaden the investment scope.

GB Investment is looking at growth capital deals (in equity and mezzanine) for late-stage financing before an IPO, for an equity check of at least USD 100m, leaving the enterprise value at around or more than USD 1bn.

The target company valuation and deal size would still vary depending on the opportunities, Lee said. Potential targets should generate revenues with a proven business model, he added.

The founder also noted that although it currently seeks growth capital opportunities as minority interest investments,“ it wouldn’t be like a 1-2% stake because we want to add strategic value as an active partner.”

GB Investment is advancing discussions with a few potential targets and may close the first deal in the fourth quarter of this year, Lee said.

The firm is going through rigorous discussions and target examination, placing particular importance on the first deal “to make a strong debut,” Kim noted.

Lee, Kim, and Partner Shwan Yum comprise the firm’s investment committee. Having offices in Seoul and Boston, the partners have been leveraging their own network to originate deals, Yum said.

The investor is keen to drive the value of its "partners" and is willing to engage in more talks with the US tech firms, with aspirations of expanding in Asia-Pacific, and advisors for potential deal opportunities.

It will raise funds on a project basis from South Korean investors, bridging their international deployment to the US market, Lee said. Backed by Korean financial institutions and pensions funds as its limited partners, GB Investment would be able to offer strategic value proposals to investee companies that seek expansion beyond the US, he noted.

Macro & Opportunity

Despite the global macroeconomic uncertainty, the US fintech industry and its focus segments remain relatively robust, whilst some segments like cryptocurrency have been hard hit by the valuation drop and unstable business perspective, Lee said.

For some startups, their valuation is also being reasonably adjusted, providing opportunistic timing for investors, he said.

The rising number of small business or platform owners during the pandemic has also driven the demand for BaaS, he said.

Lee, Kim, and Yum also pointed out the technology prowess of the US fintech sector in leading and securing an ecosystem that lays the foundation for new techs and creating innovative financial activities.

With the strategic focus, GB Investment aims to turn uncertain market factors into “certain” returns to investors, Yum noted.

The global fintech market is expected to reach USD 698bn by 2030 and the enduring pandemic has triggered the growth of the fintech sector by sparking the adoption of digitalized financial services amid social distancing, according to a report from Allied Market Research in September 2021. While global fintech investments reached USD 210bn across a record 5,684 deals in 2021, up 68% in value year-on-year, the US accounted for USD 88bn of the total, according to KPMG's report from this year.

Going Forward

With an investment horizon of about three years, GB Investment aims to make exits through IPOs, targeting an IRR of mid-teens, Lee said.

GB Investment also aims to make one to two deals in the near term and manage about USD 500m of assets in the next few years, Kim said, pointing out it focuses on the quality and size of the deal rather than the volume. It will eventually look for private buyout deals and raise blind funds, he continued.

Key Personalities

Founder and Partner Ethan Lee has a 20-year of experience as an investment professional where he most recently worked at Hyundai Motor Securities and led a co-investment in the Toshiba Memory acquisition. Before then, he led several investments at Hanwha Investment and Lone Star Funds. He has an MBA degree from MIT Sloan School of Management and a BBA degree from Yonsei University.

Partner Jay Kim worked as a product leader in a direct lending platform and a portfolio analytics fintech company before joining the firm. He also previously served at Fitch Ratings for 14 years where he set up its first Korean branch, as well as at Deloitte. He holds a BA in English from Yonsei University.

Partner Shawn Yum is an attorney in the state of New York and has extensive experience advising conglomerates and private equity firms in South Korea on cross-border M&As and joint ventures. He previously worked at Kim & Chang and Yulchon. He holds a JD degree from Georgetown University Law Center

"전례 없는 어려운 금리 환경이지만, 반대로 우량 핀테크 기업에 유리한 조건으로 투자할 수 있는 기회도 펼쳐지고 있습니다. 미국에서 회사와 투자자가 함께 윈윈할 수 있는 좋은 딜(거래)을 발굴해 나가겠습니다."

최근 미국 보스턴에서 출범한 한국계 사모펀드 GB인베스트먼트 파트너스(GBIP)의 이단 리(Ethan Lee·사진) 대표는 한국경제신문과의 인터뷰에서 "단기적으로 1~2건의 거래를 성사시킨 뒤 몇년 내 5억달러 규모의 자산을 운용하는 펀드로 성장해 나갈 것"이라며 이같이 말했다.

MIT Sloan 경영대학원 MBA 학위와 연세대 BBA 학위를 받은 리 대표는 현대차증권에서 5년간 근무하며 대형 사모펀드 관련 거래를 이끈 바 있다. 베인캐피털과 도시바 인수합병(M&A)에 참여하는 등 글로벌 M&A 거래에 7억달러를 투자했다. 그는 앞서 메리츠 증권, 도미너스인베스트먼트, 한화인베스트먼트, 스타트 에쿼티 파트너스 등을 거쳤다.

지난 7월 설립된 GBIP는 주로 주식과 메자닌 부채에 건당 1억~10억달러 규모로 투자할 계획이다. 이 회사에는 애틀란타 기반의 피치 레이팅스 사업 개발 임원 출신인 제이 킴, 글로벌 M&A 전문 숀 염 변호사 등도 합류했다.

이 회사는 우선 한국 투자자들로부터만 자본을 조달할 계획이다. 리 대표는 "우선 실적을 쌓은 뒤 미국 기관 투자자들을 대상으로 마케팅을 할 계획"이라며 "올해 4분기 중 첫 계약을 체결할 것"이라고 말했다. 또 내년 말까지 AUM(운용 자산 규모) 목표를 5억달러로 잡고 있다는 설명이다.향후 분리된 포트폴리오 회사를 통해 딜 바이 딜(회사마다 한 거래를 맡는 방식)로 투자할 예정이다.

최대 관심 분야는 미국 핀테크다. 특히 △네오뱅크 △미국 전자상거래 관련 결제 서비스 △재무관리용 기업 간 SaaS 등 3가지 핀테크 분야에 초점을 맞추고 있다. 리 대표는 "최근 거시 불확실성이 커지면서 암호화폐 등 주요 핀테크 업체들의 평가액이 떨어져 역설적으로 투자하기에 좋은 기회가 만들어지고 있다"며 "한국 연기금, 금융기관 등의 투자금을 바탕으로 미국을 넘어 글로벌 확장을 목표로 하는 기업들에 적극적으로 가치 제안에 나설 것"이라고 강조했다.

KPMG가 올해 발표한 보고서에 따르면 2021년 글로벌 핀테크 투자액은 5684건을 기록했다. 전년(2100억달러) 대비 68% 증가했다. 이중 미국의 투자액은 880억달러 수준이다.

미국 내에서 핀테크 업체들의 가치 향상을 이끌어내면서 투자자와 윈윈할 수 있는 거래를 이끌어내는 게 GBIP의 포부라는 설명이다. 리 대표는 "회사와 제로섬 게임을 하기 보다는 회사의 구성원들이 혁신적인 도전을 할 수 있도록 하는 게 중요한 포인트"라며 "파이를 키우고 근본적으로 기업 가치를 끌어올릴 수 있는 좋은 딜을 성사해나갈 것"이라고 강조했다.