Key Takeaways
- • Affinity Equity Partners has announced its third Korean acquisition in three months, securing a majority stake in ServeOne, LG Corporation's maintenance, repair, and operation (MRO) unit, as part of a broader chaebol restructuring strategy.
- • Affinity originally acquired 60% of ServeOne in March 2019 for KRW 602 billion (approximately USD 535 million), with LG retaining 40% and providing long-term profit guarantee downside protection; the new dual acquisition represents an expansion into hospital supply chain services.
- • The ServeOne investment demonstrates Affinity's track record in corporate carve-outs and business transformation in South Korea, building on previous successes including a 6x+ return on Loen Entertainment (acquired from SK Group in 2013).
- • The expansion into hospital supply chain services represents strategic diversification for ServeOne beyond traditional MRO procurement and distribution, reducing dependency on LG (which accounted for 80% of gross profit at deal inception, expected to decline to approximately 60% in 2026).
- • The global MRO distribution market is projected to grow at only 2.6% annually through 2030, reaching approximately USD 800 billion, underscoring the strategic imperative for ServeOne to access adjacent higher-growth market segments through horizontal acquisitions.
Summary
Affinity Equity Partners, a Hong Kong-based buyout firm, has announced its third Korean acquisition in three months with a dual deal involving ServeOne, LG Corporation's maintenance, repair, and operation (MRO) subsidiary. The transaction marks a significant expansion of Affinity's existing investment in ServeOne and reflects the firm's deepening presence in South Korean mid-market transactions.
Affinity first invested in ServeOne in March 2019, acquiring a 60% majority stake for KRW 602 billion (approximately USD 535 million at the time). LG retained a 40% minority position and provided long-term profit guarantee protections as downside support. The original investment thesis centered on transforming ServeOne from a traditional MRO procurement and distribution business into a diversified global player capable of serving multiple customer segments beyond its core LG relationship. At the time of the initial investment, LG accounted for approximately 80% of ServeOne's gross profit; this concentration is projected to decline to approximately 60% by 2026, demonstrating progress on the diversification strategy.
The current dual acquisition expands ServeOne's operational footprint into hospital supply chain services, representing a critical horizontal expansion into adjacent higher-growth market segments. This move addresses structural headwinds in the global MRO distribution market, which is projected to grow at only 2.6% annually through 2030, when the total addressable market will reach approximately USD 800 billion. By diversifying beyond core MRO operations, ServeOne and Affinity aim to access faster-growing healthcare logistics and supply chain verticals.
Affinity's investment strategy leverages its established track record in Korean corporate carve-outs and chaebol restructurings. The firm's previous success with Loen Entertainment—a digital music platform acquired from SK Group in 2013 and exited three years later with a 6x+ return—demonstrated the viability of extracting undermonetized subsidiaries from conglomerate parents and repositioning them for accelerated growth and market expansion. The ServeOne investment appears positioned as another case study in this playbook, leveraging LG's structural need to divest non-core subsidiaries under new leadership while providing Affinity with operational leverage and multiple expansion opportunities.
The transaction also reflects the broader strategic interests of LG's leadership under chairman Koo Kwang-mo, who assumed control in 2018 and has pursued targeted carve-outs to unlock shareholder value in subsidiary assets. Affinity's Korea team has cultivated this relationship, positioning the firm as a preferred partner for large-scale corporate restructurings within Korea's chaebol ecosystem.
Affinity first invested in ServeOne in March 2019, acquiring a 60% majority stake for KRW 602 billion (approximately USD 535 million at the time). LG retained a 40% minority position and provided long-term profit guarantee protections as downside support. The original investment thesis centered on transforming ServeOne from a traditional MRO procurement and distribution business into a diversified global player capable of serving multiple customer segments beyond its core LG relationship. At the time of the initial investment, LG accounted for approximately 80% of ServeOne's gross profit; this concentration is projected to decline to approximately 60% by 2026, demonstrating progress on the diversification strategy.
The current dual acquisition expands ServeOne's operational footprint into hospital supply chain services, representing a critical horizontal expansion into adjacent higher-growth market segments. This move addresses structural headwinds in the global MRO distribution market, which is projected to grow at only 2.6% annually through 2030, when the total addressable market will reach approximately USD 800 billion. By diversifying beyond core MRO operations, ServeOne and Affinity aim to access faster-growing healthcare logistics and supply chain verticals.
Affinity's investment strategy leverages its established track record in Korean corporate carve-outs and chaebol restructurings. The firm's previous success with Loen Entertainment—a digital music platform acquired from SK Group in 2013 and exited three years later with a 6x+ return—demonstrated the viability of extracting undermonetized subsidiaries from conglomerate parents and repositioning them for accelerated growth and market expansion. The ServeOne investment appears positioned as another case study in this playbook, leveraging LG's structural need to divest non-core subsidiaries under new leadership while providing Affinity with operational leverage and multiple expansion opportunities.
The transaction also reflects the broader strategic interests of LG's leadership under chairman Koo Kwang-mo, who assumed control in 2018 and has pursued targeted carve-outs to unlock shareholder value in subsidiary assets. Affinity's Korea team has cultivated this relationship, positioning the firm as a preferred partner for large-scale corporate restructurings within Korea's chaebol ecosystem.
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