Private equity investors in South Korea

by Aveline Tan

  • 25 May 2012
  • PE

Preqin’s Investor Intelligence tracks 48 South Korea-based LPs, excluding fund of funds managers that invest in private equity funds. They collectively allocate USD 10.4 billion to the asset class. Public pension funds are the largest group of South Korean investors in private equity funds, accounting for 36% of the capital invested. This is followed by sovereign wealth funds and insurance companies which account for 19% and 16% of private equity exposure respectively. The remainder is split between government agencies, asset managers and banks, of which government agencies contribute 14% of total private equity fund investments by South Korean LPs.

In terms of geographical focus, 60% of South Korean LPs prefer to gain exposure to private equity closer to home and within the Far East region. One such example is government agency Korea Venture Investment Corporation (KVIC). KVIC has USD 1.5 billion in total assets and manages an investment program, Korea Fund of Funds (KFOF) on behalf of the South Korean government with the overall objective of supporting South Korean companies. KVIC primarily looks to invest in South Korea-focused funds.

There are also South Korea-based LPs looking to invest overseas, where 25% of these investors look for exposure to Asia, excluding Far East. Close to a quarter of South Korea-based investors seek to gain exposure to North America (27%) and Europe (23%) each. Korea Post is exposed to private equity via separate investment pools managed by its USD 50 billion postal savings unit EverRich Postal Savings and USD 30 billion insurance unit EverRich Insurance Services. It pursues a diversified investment portfolio and invests in private equity funds on a global basis. EverRich Postal Savings previously issued a RFP for an investment of at least USD 30 million in a global secondaries fund.

When selecting fund managers to work alongside, half of South Korea-based investors will not invest in a fund raised by a first-time fund manager. 36% of  South Korean investors in private equity will invest in first-time fund managers, including spin-offs and the remainder will consider first-time funds on a case-by-case basis.

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