Fund Type Preferences of South Korea-Based Private Equity Investors- October 2012

by Wan Ping Chia

  • 05 Oct 2012
  • PE

There are currently 63 investors located in South Korea interested in private equity fund investments. Insurance companies (21%) form the largest proportion of this investor pool, while banks, public pension funds, government agencies and corporate investors also feature as significant investor types in South Korea. These 63 South Korea-based private equity investors have a combined allocation of over $11.6bn to the private equity asset class.

A remarkable 90% of these South Korea-based investors include exposure to Asia-focused funds as part of their private equity strategies, indicating a preference for opportunities close to home. Of the 56 South Korea-based investors which include Asia in their investment focus, venture (55%), buyout (52%) and growth (48%) vehicles emerge as the top three preferred fund types. Only 27% of the investor pool will consider distressed vehicles, while 20% stated a preference for funds of funds, including secondaries funds.

When it comes to seeking non-Asia exposure within their private equity portfolios, South Korea-based investors appear less keen, with only 47% indicating an interest in such regions. Interestingly, these LPs exhibit slightly different preferences in terms of fund types. An overwhelming 72% of the investor pool which will consider non-Asia investments show an interest in buyout vehicles. The proportion of LPs that prefer venture and growth vehicles stands equal at 52% each, making these fund types two of the most-sought after opportunities. South Korea-based LPs that will target opportunities outside Asia are also more receptive towards other fund types. Forty-eight percent show a willingness to invest in distressed vehicles, while 34% would commit to fund of funds vehicles, including secondaries funds.

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