South Korean private equity firms are expected to raise a record 17 trillion won ($13.8 billion) in blind funds this year, which will be used to spur investment in the merger and acquisition (M&A) market.

According to a study by Maeil Business Newspaper on Thursday, Korea’s major private equity firms, including IMM Private Equity, Hahn & Co. and STIC Investment, are expected to raise 15.8 trillion won in funds this year. The total is set to go up to 17 trillion won when including blind funds raised by mid-size firms.

The study showed that there will be 7 large-scale blind funds worth more than 1 trillion won, which is in contrast to having no blind funds of that size last year. A blind fund is a flexible fund that raises money from investors without stating an investment target.

What is significant is that global funds from Europe, North America and the Middle East are eyeing Korean private equity firms for investment.

“The U.S. government pension funds that have reduced investments in China and oil funds with much reserves are trying to expand investments in Korea,” said an unnamed official from one of the major private equity firms. “We plan to preemptively secure funds and seek investment opportunity in restructuring processes.”

Industry insiders note that 30~40 trillion won in funds are in reserve for investment in the M&A market this year. The funds are also expected to flow into the restructuring market. Global firms like Blackstone Inc. and Carlyle Group, are also expected to explore M&A opportunities in Korea.

By Kang Doo-soon, Cho Yoon-hee, and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]