Vogo suspends fundraising(4)

Following the implication of yet another Vogo executive in the Korean government’s investigation of Lone Star’s ownership of Korea Exchange Bank, the Seoul-based private equity firm has halted an ongoing fund marketing process.

Vogo, the Seoul-based private equity firm, is becoming more and more caught up in the controversy engulfing the pending sale of Korea Exchange Bank (KEB) by Lone Star, the US private equity fund.

Lee Jae-Woo, a founder and managing partner at Vogo, said in an interview with PEO today that the firm had suspended the marketing of the debut private equity fund it was currently raising. The move comes after two of Jae-Woo’s colleagues at Vogo, Byeon Yang Ho and Jason Shin, have come under pressure in the ongoing KEB investigation being carried out by Korean auditors and prosecutors.

Earlier this week it was confirmed that Byeon, who has already been detained over allegations of having accepted bribes from Hyundai Motor Company, will be probed for his involvement in KEB’s sale to Lone Star in 2003 when he was at the Ministry of Finance and Economy.

Shin, a former head of investment banking at Morgan Stanley in Korea, has now also been called up for questioning by officials investigating the KEB case. Morgan Stanley, which at the time advised on the sale, has also been implicated.

The suspension of Vogo’s fundraising promps the question whether the firm will be able to reach the $1 billion target that it set in 2005. So far date, Vogo has raised $610 million via two vehicles, one set up to attract Korean investors, the other to accommodate foreign limited partners.   

Meanwhile the KEB investigation continues. Earlier this week, Korea’s Board of Audit and Inspection (BAI), an independent watchdog, declared Lone Star an unqualified buyer of KEB on that grounds that the latter’s had been deliberately undervalued at the time of the purchase.

However, the Ministry of Finance has since challenged the BAI’s conclusions.

A spokeswoman told PEO that the ministry has issued a statement in Korean detailing its own version of events 2003 when the sale had taken place, confirming reports that it is the ministry’s view that KEB would have gone bankrupt if it had not been sold.

According to a report in The Korea Times, it is unprecedented that government authorities publicly refute findings of the BAI.