South Korea-Based LPs Investing in the Private Equity Asset Class – February 2014

by Valerie Lee

  • 21 Feb 2014
  • PE

Preqin’s Investor Intelligence currently tracks a total of 74 South Korea-based investors in the private equity asset class. The aggregate total assets of these South Korea-based investors in private equity is approximately $2.9tn. It is worth noting that the largest of these LPs is National Pension Service, a public pension fund investor which has assets under management of over $395bn. When looking to commit to new private equity funds, National Pension Service is interested in various fund types, including mid-to large-cap buyout funds and secondaries vehicles. 

The three most common investor types in South Korea are insurance companies, banks and government agencies, contributing 20%, 16% and 14% of the overall investors in this pool respectively. The remaining 50% is split among other investor types such as asset managers, corporate investors, endowment plans, foundations, investment banks, investment companies and public pension funds. In terms of geographic preference, unsurprisingly, the vast majority of this LP pool (96%) is looking to invest in Asia. Despite a strong regional preference, half of the South Korea-based LPs investing in private equity are also open to allocating capital to vehicles outside the Asia region, targeting North America, Europe and emerging markets. 

In terms of fund type preferences, South Korea-based investors in private equity are highly skewed in favor of buyout and growth vehicles, with each strategy targeted by 54% of the LPs in the country. The third most preferred strategy is venture capital, which is targeted by 45% of the corpus. South Korea-based LPs are also receptive to investing in a wide range of other fund types including distressed private equity, secondaries, turnaround, co-investment and mezzanine. 

South Korea-based investors in private equity are still on the conservative side when it comes to investing with first-time fund managers. Forty-three percent will not invest with first-time fund managers and only 20% will consider doing so. Furthermore, just 36% will actively seek to commit to first-time funds.

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