What Lies Ahead for the PEF Council After Han & Co.’s Withdrawal

Han & Co Eyes Korea Financial Investment Association Membership Amid Entry into Asset Management
Member Firms Strengthen Internal Unity with Consensus on Transitioning to an Official Association

Han & Company (Han & Co), a major private equity fund (PEF) manager in Korea, has withdrawn from the Council of PEF Managers. The remaining fund managers are strengthening their unity and continuing efforts to transition the council into a formal association.

According to the investment banking (IB) industry on April 22, Han & Co recently officially notified the PEF Council of its intention to withdraw. Han & Co has a total portfolio of assets worth 42 trillion won, ranking second in the industry after MBK Partners. The main reason for Han & Co's departure is believed to be its entry into the asset management business. Earlier this year, Han & Co established a separate asset management entity called HCAM and is reportedly considering joining the Korea Financial Investment Association in the future. Asset management companies can join the Korea Financial Investment Association, which is one of the statutory organizations, and the association actively communicates with financial authorities such as the Financial Services Commission.

There were reportedly also differences of opinion regarding the future direction of the council. Han & Co is said to have believed that, rather than banding together with smaller private equity fund managers, it would be more effective to join a more influential group such as the Korea Financial Investment Association, which encompasses a wider range of financial investment firms, in order to better represent the industry's views.

Meanwhile, regardless of Han & Co's withdrawal, fund managers within the PEF Council continue to share a consensus on transitioning into a formal association. Industry observers note that the council’s recent announcement of a plan to differentiate annual membership fees based on assets under management was only possible because the fund managers were positive about the association transition. This reflects a willingness to accommodate concerns that limited budgets had restricted the council’s activities.

Fund managers are also actively exchanging opinions within the council regarding regulations on institutional private equity funds, which have fueled the push for association status. There is reportedly a consensus to oppose restrictions on leverage limits, while accepting the introduction of mandatory executive compensation disclosure requirements. An IB industry source commented, "Reducing the leverage limit could shake the industry itself more than public disclosure of executive compensation." It is said that the council communicated this view, and financial authorities accepted the position. In fact, the financial authorities expressed opposition in a National Assembly review report to a proposed amendment to the Capital Markets Act aimed at reducing the leverage limit for private equity funds, citing the reason of "prior regulation." To prevent discriminatory regulations focused only on domestic registered managers, the fund managers are also reportedly discussing ways to restrict foreign managers' business opportunities in Korea.

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