Last Year's PEF Investment Hits Record High Again at 18.1 Trillion Won... 13% Increase YoY

[Asia Economy Reporter Park Jihwan] Last year, the annual investment amount of domestic private equity funds (PEF, Private Equity Fund) once again set a new record high.

According to the '2020 PEF Trends and Implications' announced by the Financial Supervisory Service on the 21st, as of the end of last year, the number of management participation-type PEFs totaled 855, growing 2.7 times since 2015 (316 funds).

The amount committed by investors to PEFs (commitment amount) was KRW 97.1 trillion, an increase of 1.7 times compared to 2015. The amount actually contributed by investors to PEFs (paid-in amount) was KRW 70.6 trillion, increasing 1.8 times during the same period.

Domestic PEFs invested KRW 18.1 trillion in 565 companies last year and recovered KRW 17.7 trillion. The investment amount significantly exceeded the average investment execution scale of KRW 12.8 trillion over the previous five years. Major investment cases included Macquarie Asset Management’s LG CNS, Skylake Investment’s Solus Advanced Materials, and Glenwood Private Equity’s PI Advanced Materials. The investment amount increased by KRW 2.1 trillion (13.13%) compared to KRW 16 trillion the previous year, setting a new record high and marking four consecutive years of growth.

The investment recovery amount also reached a record high of KRW 17.7 trillion, increasing by KRW 6 trillion compared to the previous year. Major recovery targets included MBK Partners’ Daesung Industrial Gases, Premier Partners’ Kakao Games, Settle Bank, and Hahn & Company’s H Line Shipping.

The number of dissolved PEFs was 91, an increase of 26 compared to the previous year. As of the end of last year, the number of general partners (GPs) of PEFs was 337, up by 33 from 304 the previous year. Among them, 245 companies, accounting for over 70%, were counted as full-time GPs.

Last year, the amount of new PEF fundraising (commitment amount of newly established PEFs) was KRW 17.9 trillion, an increase of KRW 2.3 trillion compared to the previous year. The number of newly established PEFs also increased by 12 companies.

The Financial Supervisory Service explained, "Last year, the domestic PEF market grew as the number of general partners (GPs), newly established PEFs, and investment amounts all surpassed previous record levels," adding, "PEFs are strengthening their influence as major players in corporate mergers and acquisitions by enhancing corporate value before listing and merging with peer companies before sale."

In particular, it forecasted that "with the introduction of institution-only private funds and the relaxation of private fund management regulations, enabling various investment strategies, corporate restructuring and M&A are expected to be revitalized."

This content was produced with the assistance of AI translation services.