Last Year’s Institutional Private Equity Funds Reach 'Record High'... Dominance of Major Firms Intensifies

Institutional Private Equity Funds Increase by 4.6%... Execution Amount at 77.5% of Commitment Amount
FSS "Strengthening Communication on Support Measures and Seeking Ways to Enhance Market Soundness"

Last year, the domestic institutional private equity fund market showed remarkable growth in scale. The number of funds, investment and recovery amounts, and the number of liquidated funds all reached record highs. This is attributed to the establishment of a virtuous cycle structure in the institutional private equity fund industry, linking new fund creation, investment, and recovery. As overseas investment expanded mainly through large General Partners (GPs), global market recognition increased; however, competition among small GPs intensified due to the concentration of funds toward large GPs.

According to the Financial Supervisory Service on the 27th, as of the end of last year, there were 1,098 institutional private equity funds, an increase of 48 from the previous year. The committed amount rose by 9.7 trillion KRW during the same period to 125.3 trillion KRW, and the executed amount increased by 10 trillion KRW to 97.1 trillion KRW.

The number of General Partners (GPs) reached 415 at the end of last year, up by 21 from the previous year. Dedicated GPs numbered 312, accounting for 75.2% of the total. By size, there were 35 large GPs with committed capital of 1 trillion KRW or more, 160 medium-sized GPs with 100 billion to 1 trillion KRW, and 220 small GPs with less than 100 billion KRW.

Last year, 175 new institutional private equity funds were established, a decrease of 145 from the previous year. The amount of capital raised was 16.3 trillion KRW, down by 7.2 trillion KRW during the same period. Among these newly established institutional private equity funds, 11 were large (committed capital of 300 billion KRW or more), 41 were medium-sized (100 billion to 300 billion KRW), and 123 were small (less than 100 billion KRW). By type, project funds were the most common at 144, followed by blind funds at 31.

The investment execution scale of institutional private equity funds last year was 36.9 trillion KRW, with 25.5 trillion KRW invested domestically and 11.4 trillion KRW overseas. These amounts represent increases of 11.4% and 159.1%, respectively, compared to the previous year.

Most of this capital was concentrated in the top five industries, including manufacturing. Specifically, 30.9 trillion KRW, or 83.8% of the total, was invested in manufacturing, information and communication, wholesale and retail trade, finance and insurance, and water supply, sewage, and waste treatment and resource recycling industries. The unexecuted committed amount, indicating additional investment capacity, was 28.2 trillion KRW, a decrease of 300 billion KRW over one year.

The amount recovered from investments was 18.1 trillion KRW, exceeding the average recovery amount of 15.2 trillion KRW over the previous three years. This was due to large-scale recoveries exceeding 1 trillion KRW last year. By recovery stage, intermediate recoveries amounted to 5.4 trillion KRW, and final recoveries were 12.7 trillion KRW. The number of liquidated institutional private equity funds was 127, an increase of 10 from the previous year. The average duration was 3.9 years.

A Financial Supervisory Service official stated, "Last year, the domestic institutional private equity fund market showed continuous growth in scale, with record highs in the number of funds, investment, and recovery amounts. This is due to the entry of new GPs and the increase in fund establishments, leading to the establishment of a virtuous cycle structure in the institutional private equity fund industry." He added, "To ensure the continuous growth of the institutional private equity fund industry, we will actively collect industry opinions on institutional support and reflect them in supervisory tasks, and we will also seek measures to strengthen monitoring and supervision of GP business practices to prevent damage to market trust in the institutional private equity fund industry."

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