Big PEFs to double ammunitions next year, advance into venture capital markets

2021.11.24 15:49:15

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Big private equity funds active in South Korea are preparing to double fund scope next year to leverage on eased capital market rules and make preemptive investments in promising companies.

According to industry sources on Wednesday, the country’s major PEFs such as MBK Partners, IMM Private Equity, and Stic Investments are planning to raise more than 10 trillion won ($8.43 billion) in total, twice their previous fundraising goals.

Investments into early startup and growth stage companies by these PEFs are also expected to increase as the so-called 10 percent rule was abolished under a revised capital market act effective last month. Like small venture capitals, PEFs also are allowed to buy a stake of less than 10 percent in target companies under the new law.

IMM PE will create Rose Gold Fund No. 5 with a target fundraising goal of 2 to 3 trillion won, up by about 1 trillion won compared with its No. 4 fund valued at 1.9 trillion won.

Stic Investments reportedly aims to raise over 2 trillion won for its Special Situation Fund (SSF) No. 3 next year, twice larger than its No. 2 fund of 1.22 trillion won. The SSF is a fund that invests in companies in special circumstances such as restructuring. Stic Investments leveraged its SSF to invest in Hi Parking, a company specializing in parking lot management, and a Malaysian subsidiary of copper foil maker Iljin Materials.

SkyLake Investment will start marketing in the second half of next year for No. 12 blind fund worth 1 trillion won, up by 300 billion won compared to the No. 11 fund.

Glenwood recently launched its No. 2 blind fund ‘Glenwood Korea No. 2’ with a goal of investment of up to 3 trillion won.

The total amount of new funds planned by these large PEFs is estimated to come to 10 trillion won and their actual investment could grow to more than 20 trillion won when a leveraged buyout (LBO) strategy is deployed.

By Park Chang-young and Minu Kim

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