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South Korea-Focused Private Equity Fundraising Trends

by Aveline Tan

  • 16 Jul 2012
  • PE

From 2008 to July 2012, 57 solely South Korea-focused funds (excluding funds of funds and secondaries) successfully held final closes, raising $4.3bn in aggregate capital. The majority of South Korea-focused vehicles closed since 2008 were raised by South Korea-based fund managers (95%), with the remainder raised by Japan-, US- and Switzerland-based firms.

In 2008 an aggregate capital of $871mn was raised from the closing of 12 South Korea-focused vehicles. Fundraising activity declined sharply in the following year, 2009, when only $342mn in capital was raised from the closing of 13 South Korea-focused vehicles.

In 2010, fundraising activity in South Korea experienced a marked improvement when $1.4bn was raised from the closing of 16 South Korea-focused vehicles. While the venture capital fund type only accounted for 34% of total capital raised in 2010, it made up 69% of the number of South Korea-focused private equity funds that closed that year. The largest South Korea-focused venture vehicle closed in 2010 was Daishin Heungkuk Private Equity Fund No.1, managed by South Korea-based fund manager Daishin Securities. The vehicle closed at KRW 200bn (approximately $180mn) and provides venture capital funding to South Korean companies operating in a wide range of industries.

Most of the capital raised by South Korea-focused private equity funds from 2008 to July 2012 was raised in 2011, when an aggregate capital of $1.8bn was raised from the closing of 15 funds. Buyout funds accounted for the majority of capital (73%) raised in 2011, and the largest buyout fund closed was Hahn & Company I. The vehicle closed at $750mn and is managed by South Korea-based fund manager Hahn & Company. The fund seeks buyout opportunities in a variety of sectors, including manufacturing, IT, technology and financial services industries in South Korea. The fund is also the largest South Korea-focused buyout fund closed since 2008.

Recent fundraising trends indicate a shift away from solely South Korea-focused vehicles to vehicles investing in geographies not limited to South Korea. There are currently 21 private equity funds on the road (excluding funds of funds and secondaries) with an allocation to South Korea seeking to raise an aggregate capital of $12.8bn from investors. Unlike solely South Korea-focused vehicles, these vehicles are primarily (67%) raised by overseas fund managers based outside of South Korea.

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