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Local PEFs Accounting for 90% of M&A Investments in Korea
Private Equity Funds
Local PEFs Accounting for 90% of M&A Investments in Korea
  • By matthew
  • October 15, 2013, 02:50
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During the first three quarters of this year, private equity funds (PEFs) have made a total investment of 8.6628 trillion won (US$8.1120 billion). This amount is almost equivalent to the market capitalization of LG Display, 8.6949 trillion won (US$8.1321 billion). 

This year, PEFs have invested or signed contracts to do so in well-known companies. For example, MBK Partners, the largest PEF in Korea, has purchased ING Life Insurance (1.840 trillion won, US$1.723 billion), Coway (1.1915 trillion won, US$1.1117 billion), and NEPA (990 billion won, US$923 million). STIC Investment formed consortia with other PEFs to buy shares of LIG Nex1 (420 billion won, US$392 million) and Dongbu Farm Hannong (328.4 billion won, US$306.4 million). 

Unlike in the past, local PEFs are increasing their presence in the market this year. Until recently, foreign PEFs have led the growth of the market by investing in Korea Exchange Bank, OB Beer, WiniaMando, Haitai Confectionery & Foods, CJ CGV, Hyundai HCN, Nolbu, Hyundai Rotem, LOEN Entertainment, and many more. 

However, things have changed drastically this year. Those by foreign PEFs take up just 9.7% of the total PEF investments completed or signed until the end of the third quarter. At the same time, local PEFs are turning their eyes toward overseas markets, too. MBK Partners have acquired the Japanese coffee company Komeda and are about to take over the Korean subsidiary of ING Life Insurance. 

As of the end of September, the combined operating assets of local PEFs reported to the Financial Supervisory Service reached 42.025 trillion won (US$39.335 billion), with which they could buy 72% of the shares of Hyundai Motor Company. The market capitalization of the automaker is 58.2631 trillion won (US$54.5343 billion), the second-highest among listed Korean companies. Under the circumstances, many companies are facing a change in ownership paradigm.