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Korea Development Bank was the Largest Investor in the Private Equity Fund that Invested in the Rental Car Company Linked to ‘Kim Keon-hee’s Butler’

[비즈한국] It has been confirmed that the Korea Development Bank (KDB) is the largest investor in the Neoplux Private Equity Fund No. 3. The Neoplux Private Equity Fund No. 3 is the fund that invested 25 billion KRW into ‘IMS Mobility (formerly Be My Car),’ a company associated with Kim Ye-seong, a ‘butler’ to First Lady Kim Keon-hee. This means KDB indirectly invested in IMS Mobility through the private equity fund. It is also confirmed that KDB made a direct investment in IMS Mobility in 2017. Currently, the special counsel team investigating Kim Keon-hee is looking into matters related to Kim.

Neoplux established the ‘Neoplux Private Equity Fund No. 3’ in 2018 and invested 25 billion KRW in IMS Mobility in March 2020. As a result, the fund held 11,774 common shares (a 19.19% stake) of IMS Mobility as of the end of 2020. Subsequently, in September 2020, Shinhan Financial Group055550 acquired Neoplux, and the company was renamed Shinhan Venture Investment. The Neoplux Private Equity Fund No. 3 also came under the control of Shinhan Financial Group.

As of the end of last year, the Neoplux Private Equity Fund No. 3 held 221,550 common shares and 588,700 redeemable preferred shares of IMS Mobility. Combined, this accounts for a 20.34% stake. This is only 0.01 percentage points (p) away from the 20.35% stake held by IMS Mobility CEO Cho Young-tak, the largest shareholder.

IMS Mobility is a rental car company in which Kim Ye-seong, known as First Lady Kim Keon-hee's butler, participated in the establishment. As of the end of 2017, Kim held a 14.40% stake in IMS Mobility and served as an internal director. Recently, it was reported that HS Hyosung, Kakao039490 Mobility, and Kiwoom Securities039490 had invested in IMS Mobility, which the special counsel team is currently investigating. The team is reportedly also looking into Shinhan Venture Investment, which manages the Neoplux Private Equity Fund No. 3.

Bizhankook’s coverage confirms that the largest investor in the Neoplux Private Equity Fund No. 3 is KDB. KDB’s contribution to the fund is around 40%. In contrast, Shinhan Venture Investment, which manages the fund, contributed only 10%. By investing in IMS Mobility, the Neoplux Private Equity Fund No. 3 effectively means KDB has made an indirect investment in IMS Mobility.

As KDB is the largest investor in the Neoplux Private Equity Fund No. 3, the possibility that it provided input on investment decisions exists. A financial industry official stated, "If it weren't a blind fund, they would have invested after discussions with investors, but because the Neoplux Private Equity Fund No. 3 is a blind fund, it is difficult to say for certain."

Management of the Neoplux Private Equity Fund No. 3 is strictly handled by Shinhan Venture Investment. Therefore, the final decision and responsibility for investments lie with Shinhan Venture Investment, and there is no evidence that KDB was directly involved in the investment activities. The Neoplux Private Equity Fund No. 3 is also confirmed to have invested in numerous other companies besides IMS Mobility.

Regarding questions about whether KDB provided investment opinions, a Shinhan Financial Group official stated, "It is difficult to know the details as this occurred before Shinhan Financial Group acquired Shinhan Venture Investment," but added, "I understand that (the IMS Mobility investment) was conducted through proper investment deliberation processes."

It is also confirmed that KDB made a direct investment in IMS Mobility. KDB invested in the company in 2017, securing a 7.41% stake. This investment occurred before KDB contributed to the Neoplux Private Equity Fund No. 3. There are also allegations that KDB supported IMS Mobility through loans. It is alleged that KDB provided a total of 2.9 billion KRW in support to IMS Mobility through complex loan products, including 2.4 billion KRW in 3-year maturity general loans and 500 million KRW in bonds with warrants (BW). Representative Park Eun-jung of the Rebuilding Korea Party stated on social media, "KDB even stepped in to approve loans for IMS Mobility," adding, "We must immediately repatriate Kim Ye-seong, a key figure in these allegations, and initiate a forced investigation."

In 2017, when KDB made its direct investment, IMS Mobility’s performance was unremarkable. Operating profit fell 19.04% from 1.19 billion KRW in 2015 to 964.5 million KRW in 2016. While not a large profit, it was already on a downward trend. In 2017, the company recorded an operating loss of 1.77 billion KRW, shifting into the red.

However, it is too early to conclude that KDB made the investment with former President Yoon Suk-yeol in mind. Both KDB’s direct investment and the Neoplux Private Equity Fund No. 3’s investment in IMS Mobility took place between 2017 and 2020, during the Moon Jae-in administration. While former President Yoon was a powerful figure in law enforcement at the time as the Chief of the Seoul Central District Prosecutors' Office and Prosecutor General, there were no known special ties or conflicts between him and KDB.

In the end, KDB not only invested directly in IMS Mobility but also made an indirect investment through the Neoplux Private Equity Fund No. 3. However, given the current climate, recovering the investment is not expected to be easy. IMS Mobility continues to suffer from worsening profitability, recording an operating loss of 3.1 billion KRW last year. Even its public image has been tarnished due to the recent controversy.

A KDB official said, "We participated as an institutional investor (LP), and investment matters are fundamentally determined by the management firm." However, the official did not respond to questions regarding the reasons for the direct investment in IMS Mobility.