Financial Investment Association to Strengthen Membership for Professional Private Equity Managers

[Asia Economy Reporter Oh Ju-yeon] The Korea Financial Investment Association announced on the 21st that it will promote a membership enhancement plan to support strengthening the internal control capabilities of professional private equity fund managers through enhanced member services.

Small-scale professional private equity fund managers have played the role of venture capital by supplying funds to startups and venture companies, contributing to the growth of the capital market. However, due to liquidity crises caused by risk management failures of some managers and incomplete sales leading to a decline in investor trust, the industry as a whole has been shrinking.

On April 27, the policy authorities announced the 'Final Plan for Private Fund System Improvement,' stating that the autonomy of fund management will continue to be guaranteed so that the inherent positive functions of private funds, such as supplying venture capital, are not impaired. They also plan to establish a foundation for risk management through market discipline functions such as mutual monitoring and checks among market participants.

Accordingly, the association plans to activate the self-regulatory function through differentiated service strategies for members and non-members. In particular, considering that 31% (70 out of 225) of professional private equity fund managers registered with the Financial Services Commission are non-members of the general meeting, the association will significantly improve incentives for non-members to join and strengthen services for existing members.

First, the effectiveness and convenience of services for member companies will be enhanced. To expand online-based services, the association will establish the 'KSB (Knowledge Sharing Board)' and an online community for compliance officers of professional private equity fund managers to strengthen regulatory compliance capabilities. It also plans to improve the perceived value of association services for asset management companies through recruitment support for professional personnel.

Additionally, the scope and level of association services will be differentiated between members and non-members. By improving the fund statistical information system, the association will strengthen information provision functions for member companies and promote the expansion of member services such as regular special lectures for newly joined members, various consultative meetings, and seminars.

Regulations will also be differentiated between member and non-member companies. For non-members, unlike members, direct monitoring by the Financial Supervisory Service will be strengthened, and costs will be differentially charged for using association services such as disclosure and advertisement review, and registration of financial investment professionals. Furthermore, a symbol mark system will be introduced so that investors can verify whether a professional private equity fund manager is a member of the association.

The Korea Financial Investment Association stated, "We will dramatically improve the membership experience of member companies and significantly raise the level of the professional private equity fund management industry."

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