Small S.Korean PE firms flex muscle during pandemic

Private equity firms registered in South Korea enjoyed a 20% jump in their accumulated commitments in 2021 as a whole, led by small and medium-sized investment firms.

A big chunk of new capital committed to the private equity sector in 2021 went to smaller or new PE firms, including Crescendo Equity Partners and Affirma Capital Managers Korea, a study by Market Insight, The Korea Economic Daily’s capital market news outlet, shows.

By comparison, the country's two largest PE players MBK Partners and Hahn & Co., reported a decline or much slower growth than the sector average. Both PE firms did not launch new funds last year, despite abundant market liquidity.

IMM Investment Corp. posted a 45% jump on-year to a total of 5.3 trillion won in commitments as of end-2021. The Seoul-based PE house has $5.4 billion in assets under management (AUM) as of the end of last year.

STIC Investments, with $4.7 billion in AUM, saw a 36% rise to 4.3 trillion won in aggregate commitments.

Both IMM and STIC launched new vehicles last year.

Among smaller players, nine PE houses joined the club of reaching 1 trillion won ($766 million) in terms of capital commitments.

Crescendo PE, targeting mid-cap companies, raised a combined 1.1 trillion won in four vehicles last year, bringing its accumulated commitment to 1.7 trillion won. Some of the money was used to buy a stake in Medipost Co., a South Korean biotechnology company.

Affirma Capital Managers Korea and JC & Partners enjoyed brisk fundraising last year, boosting their cumulative commitments to 1.2 trillion won and 1.1 trillion won, respectively.

Six other Seoul-based PE firms added to the 1 trillion won club list last year are Centroid Investment Partners; KDB Investment; E&F Private Equity; SJL Partners; IMM Credit & Solution; and Eugene Private Equity.

However, Q Capital Partners is among the few domestic PE players that suffered a decline in commitments, driving its cumulative commitments below 1 trillion won.

MBK saw an 18% decrease to 11.2 trillion won in commitments last year from a year earlier. A PE industry source said that the liquidation of some MBK funds and exits from ING Life Insurance Co. and Coway Co., a water purifier brand, were behind the decline.

Instead, Asia’s largest PE firm MBK with $25.6 billion AUM raised around $1 billion from a stake sale to New York-based Dyal Capital Partners earlier this year.

Capital commitments to Hahn & Co. increased 9% to 8.8 trillion won in aggregate in 2021 versus the year previous. But the growth is attributed primarily to foreign exchange gains after it converted foreign investors’ commitments into the Korean currency.

Founded in 2010, Hahn & Co. raised $3.2 billion for two Korea-focused funds in 2019.

South Korea’s leading law firm Jipyong LLC said that many large private equity funds have not yet exhausted significant cash reserves they amassed over the past few years.

To put their funds to use, investment bankers are scurrying to hunt for suitable acquisition targets for PEFs, Jipyong said in its report issued last March.

The above data is based on a total of 394 PE firms contained in a regular report filed by the regulatory Financial Supervisory Service.

Write to Tae-Ho Lee at thlee@hankyung.com
Yeonhee Kim edited this article.