After the Lime Scandal, Major Overhaul of Private Equity Funds... Financial Supervisory Service Chief Urges "Make Efforts to Expand Overseas"

[Asia Economy Reporter Ji Yeon-jin] On the 9th, Jeong Eun-bo, Governor of the Financial Supervisory Service (FSS), met with CEOs of institution-only private equity fund management companies and said, "Now that a new environment has been established, I hope you will strive to discover various overseas investment targets to generate high returns and support the overseas expansion of domestic companies."

Governor Jeong made these remarks at a meeting with the institution-only private equity fund industry held at the Kensington Hotel in Yeouido, Seoul, in the morning, adding, "The FSS will actively support this as well." This is the first time since the Lime incident erupted in July 2019 that the FSS Governor has met with the private equity fund industry.

The financial authorities have significantly reformed the private equity fund system following a series of financial accidents such as the Lime and Optimus incidents, which caused damages amounting to 1.6 trillion won. Previously, private equity funds were divided into professional investor type and management participation type (PEF), and individuals with funds exceeding 300 million won could all invest. However, since October last year, the system was reorganized into general and institution-only private equity funds, and individual investors are no longer allowed to invest in institution-only private equity funds. Instead, institution-only private equity funds, which were previously limited to management participation purposes, can now adopt various management strategies such as mezzanine and loans.

Governor Jeong explained, "The PEF industry has supported the growth and restructuring of domestic companies over the past 16 years, establishing itself as a central pillar of the domestic capital market. Last year, it participated in most major M&As, playing a leading role in the market. It has also achieved continuous quantitative growth by recovering investments through IPOs of IT innovative companies and block deals."

He continued, "Through clear strategies and management efficiency, it has enhanced the competitiveness of acquired companies and played the role of a savior for companies temporarily facing difficulties, achieving qualitative growth as well."

He urged, "As economic uncertainties increase, I ask you to consider issues that could burden the ordinary economy, such as excessive workforce restructuring and excessive fee increases focused on profit models. The FSS will also support the autonomous and private nature of private equity fund operations as much as possible and actively reflect the various opinions exchanged today in policy."

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