Crescendo hits $398m hard cap on second Korea fund

The fundraising process took approximately 12 months. The LP base is dominated by Korean institutional investors, many of them re-ups, with a smattering of international capital. 

The initial target for Fund II was KRW300 billion. Even that would have represented a substantial step up from Crescendo’s debut blind pool vehicle, which closed at KRW74 billion in 2015. Before that, the firm – which was seeded in 2012 by PayPal co-founder Peter Thiel – operated on a project fund basis.

Several of those project fund plays have paid off, with a partial exit from precision prototype manufacturer Model Solution earlier this year through a sale to Hankook Tire. The GP can also point to three full exits from Fund I, including Sangshin Electronics, an electromagnetic wave filter manufacturer that went public last year, and Hanmi Semiconductor. The latter is a listed company Crescendo backed for the first time through a project fund before returning with blind pool capital.

The private equity firm still holds positions in the likes of information security solutions provider Wins and software developer Hancom. The industrial technology theme has been there from the outset. Indeed, the team’s tech credentials were in part what won over Thiel. Kevin Lee, the founding partner, was an engineer and a technology sector consultant at McKinsey & Company before serving as Korea head at Excelsior Capital Asia.

“We focus on Korean companies that are globally competitive. The country is generally very strong in industrial high-tech, so that’s a natural target for us,” Lee explained. “These are B2B technology companies and they aren’t very well known. It’s not like with well-known consumer companies where you have lots of investors chasing them; our deals tend to be one-to-one negotiations.”

Sector specialization is seen as giving the firm an edge in deal-sourcing, with a wealth of opportunities already coming through referrals from the management of existing portfolio companies. Lee expects this virtuous circle to widen as Crescendo uses its newly committed capital to support a larger number of businesses, but he admits to keeping a wary eye on macroeconomic issues.

“Given the state of the global economy and the difficulty in predicting where it’s heading, being disciplined on entry valuations is critical,” he said.

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• Topics
• North Asia
• Fundraising
• Growth
• Industrials
• Technology
• GPs
• South Korea
• Crescendo Equity Partners