Positive vibes spread on Korea

Our preliminary numbers tell most of the story. According to AVCJ Research, a total of 167 private equity deals were recorded in 2012. While this doesn't represent a significant jump from the 155 transactions completed in 2011, total deal value more than doubled to $7.1 billion.

The majority of the 2012 deals were the work of Korean GPs, including one of the largest - MBK Partners' KRW1.2 trillion ($1.1 billion) investment in water purifier manufacturer WoongjinCoway, which appeared doomed for a while as the parent company filed for bankruptcy. Other large-cap deals featured some well-known international names such as Affinity Equity Partners, which led an investor group that purchased a minority stake in Kyobo Life, also for $1.1 billion.

In terms of fundraising, with Korean LPs being among the most aggressive backers of alternative assets, it is no wonder that local GPs raised a total of $6.5 billion. MBK was again at the top of the charts, reaching a $1.25 billion first close on its third North Asia-focused fund, which has a full target of $2.25 billion.

IMM Private Equity raised a similar amount for two separate vehicles - IMM Rose Gold Private Equity Fund II and IMM Corporate Partnership 1 Private Equity Fund. STIC Ventures and Neoplux also completed successful fundraising efforts.

The sense of optimism extends into the political arena. Some industry observers have expressed concerns over the President-elect Park Geun-hye, who is seen as less critical of the chaebols than her predecessor.

Nevertheless, Park has promised a ban on future cross-shareholdings, whereby the chaebols' founding families retained control despite holding small stakes. It may not be as appealing as the policies proposed by the president-elect's more liberal rivals, but many investors would welcome any move to curb the chaebols' appetite for acquisition, clearing the path for private equity.

Other economic measures championed by South Korea's first female leader that are welcomed by the private equity community include more support for small- and medium-sized enterprises (SMEs) as part of a democratization policy aimed at boosting fairness and transparency. Remember, the majority of private equity portfolio companies fall under this category.

The question is, as with all good times, how long before the leaves start falling? While there will continue to be nagging issues like chaebol powers and investor rights - of which Lone Star Funds' case against the government over Korea Exchange Bank is a pertinent reminder - the positives currently appear to outweigh the negatives.

There are as yet no signs that the momentum will slow... fingers crossed.

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• Topics
• North Asia
• LPs
• Fundraising
• South Korea
• IMM Investment
• Fundraising