Popular Korean PEF
IMM Private Equity recently raised a private equity fund (PEF) by attracting 58.69 billion won from the Employees Provident Fund (EPF) of Malaysia, which is one of the largest pension funds in Southeast Asia that recorded a total asset of 220 trillion won at the end of last year. Earlier in August this year, IMM Private Equity attracted an investment of 29.35 billion won from Pavilion, a subsidiary of Temasek Holdings. Pavilion had invested 19.65 billion won in IMM Private Equity in 2013 as well. IMM Private Equity is planning to raise about 100 billion won in addition by the first half of next year with institutional investors in North America and Asia.
In the meantime, STIC Investment is currently raising funds with Middle Eastern sovereign wealth funds, public pension organizations and so on for its new PEF, which is expected to be set up in the first half of 2016 with a size of up to 150 billion won. The Abu Dhabi Investment Authority and Audi Capital invested 110 billion won and 30 billion won in STIC Investment last year in this regard.
These Korean fund operators’ activities have to do with the explosive growth of the Korean M&A market. The total M&A transaction volume in this market almost doubled from US$47.9 billion to US$95 billion between 2009 and last year with the number of M&A deals going up from 851 to 1,057. During the first three quarters of this year, the figures amounted to US$85.8 billion and 945. The size of the market is likely to further increase in 2016 as the Korean government recently announced that large-scale restructuring would be underway in such industries as shipbuilding, shipping and steel.
Korean PEFs’ excellent performance in the domestic M&A market is another reason for foreign institutional investors’ keen interest in the market and trust in the PEFs. For example, MBK Partners purchased Homeplus from Tesco at 7.2 trillion won in conjunction with the Canada Pension Plan Investment Board, the Public Sector Pension Investment Board of Canada and Temasek. This year, IMM Private Equity bought Tailim Packaging and its subsidiaries at 350 billion won while investing 300 billion won in Taihan Electric Wire for its rights of management in the company.