[MK NEWS] The Exit Myth of Olive Young Glenwood... This time, they invested 150 billion KRW in Silicon2.

Glenwood, renowned for its investment in CJ Olive Young, is investing in Silicon2 through its credit private equity fund, Glenwood Credit. The investment amounts to 150 billion KRW.

Since its establishment in August 2021, Glenwood Credit has become a leading fund in the domestic credit investment market, which has expanded since the revision of the Capital Markets Act in 2021. In April of last year, it also formed the first blind fund among domestic credit private equity funds. As of February, the fund has raised approximately 600 billion KRW from major domestic institutional investors, making it the largest fund in terms of committed capital in the domestic credit private equity space.

Kim Sung Woon, CEO of Silicon2

Why Silicon2 ?

The choice of Silicon2 as the first investment following the formation of the blind fund by Glenwood Credit is attributed to both the impressive growth of the K-beauty market and Silicon2's unique position in the cosmetics industry value chain.

Unlike other distributors, Silicon2 has long been introducing K-beauty indie brands to overseas markets such as the U.S., establishing a model for mutual growth and enjoying the advantages of being a first-mover. With brands like Beauty of Joseon , Medicube, and Biodance, Silicon2 has quickly surpassed 100 billion KRW in overseas sales and continues to thrive.

The founder, CEO Kim Sung-woon, originally started with exporting memory semiconductors, but after the decline of nearby IT companies with the rise of smartphones, he shifted his focus to K-beauty in the mid-2010s, entering the overseas export agency business. Back then, competition in the Chinese and Southeast Asian markets was fierce among domestic trading companies, so he shifted his attention to the U.S. market, where he had prior experience with semiconductor exports. This move proved to be a "stroke of genius." As a result, by 2021, Silicon2’s revenue reached 131 billion KRW (operating profit of 8.8 billion KRW). As the K-beauty market surged, by the third quarter of 2024, Silicon2's accumulated revenue reached 518 billion KRW (operating profit of 111 billion KRW), showing an impressive annual growth rate of over 60%. The stock price also surged last year, briefly placing the company 11th in market capitalization on the KOSDAQ.

The business performance from 2021 to the third quarter of 2024
 (Unit: 100 million KRW)

What Happens After the Investment?

Following the investment, Glenwood Credit plans to continue collaborating with Silicon2 to enhance its global competitiveness, leveraging its network of large and mid-sized companies.

A representative from Silicon2 said, “Since last year, we have engaged with various investors to raise capital, but we chose Glenwood as our final partner due to their broad corporate network and solid partnerships.” During the negotiation process, CEO Kim Sung-woon suggested that a portion of the excess profits from the investment exit be paid to the company, a proposal that Glenwood Credit accepted. This excess profit will be used as performance bonuses for Silicon2’s employees. This is a departure from the usual practice of distributing excess profits to the major shareholder through profit-sharing arrangements. A company representative explained, “This is an unusual decision to allocate excess profits to all employees of the invested company.”

Confidence from Previous Olive Young Investment

Glenwood has already demonstrated successful results in K-beauty investments.

Glenwood’s private equity fund, Glenwood PE, which focuses on institutional investors, acquired a 22.6% stake in CJ Olive Young in 2021. After about three years, they sold it back to the CJ Group last year, recouping 780 billion KRW. The initial investment was 414 billion KRW, with an internal rate of return (IRR) of 30%. When Glenwood made the investment, CJ Olive Young's revenue for 2021 was 2.1 trillion KRW. By the time of the sale, in 2023, the revenue had soared to 3.86 trillion KRW, securing its position as the overwhelming leader in the H&B market.