Invest KOREA

In Korea, the sale of non-core businesses by conglomerates aimed at restructuring their businesses is an important driver of growth in the Korean PEF market. PEFs are pursuing the strategy of acquiring non-core businesses of conglomerates and selling them back at an increased value. For instance, in 2022 and 2023, SK Group sold non-core businesses such as polyester film (SKC), industrial gas (SK Materials), and security (SK Shields) to private equity firms such as Sweden's EQT Partners.

Digital transformation of the Korean economy is in full swing. In recent years, numerous e-commerce, software, and other digital transformation companies, including Coupang, Yanolja, and Douzone Bizon, have raised funds from financial investors. A case in point is Douzone Bizon, the nation's leading ERP software developer, which received a USD 0.36 billion investment from the US-based Bain Capital private equity fund in 2021.

The succession of Korean conglomerates has emerged as another financial investment opportunity. With the retirement of the founders of major players in various traditional industries that have led the development of national economy since the 1960s, a number of companies are selling their control. A case in point is the founder of Hanssem Interior who reached his 80s and sold his company to IMM Private Equity in 2021 at USD 1.2 billion.

Korea has a rapidly aging population, which provides more investment opportunities in the healthcare industry. For example, MBK Partners - Korea's largest private equity firm - acquired dental implant maker Osstem Implant for KRW 2.2 trillion in 2023. Around the same time, the company also acquired oral scanner maker Medit for KRW 2.4 trillion.

The reformed PEF system has been in place as of October 2021 in Korea. The most notable change is the classification of PEFs from professional investment type and management participation type to general PEFs and institution-only PEFs. The relaxed system allows for a wider range of investment strategies for purposes other than management participation.

The Venture Investment Promotion Act (hereinafter the Venture Investment Act) was enacted in Korea in February 2020 and has been in effect since July 2020. Based on the Act, the venture investment systems stipulated across different laws were realigned to create a consistent venture investment ecosystem, and regulations were relaxed to facilitate private venture capital investment and individual angel investment.

In addition to venture capital funds that directly invest in companies, the amendment to the Venture Investment Act in April 2023 provides the legal basis for the formation of private indirect venture capital funds, which can increase stability through indirect and decentralized investments in venture capital funds. By allowing the private sector to act as a parent fund, the amendment is expected to facilitate the inflow of private funds into the venture investment market.

From November 2023, unlisted venture companies whose founders' voting rights have declined due to large-scale stock issuance will be able to issue multiple voting shares with the consent of shareholders. The system applies if the founder of the venture company attracts investment to see his/her shares reduced to 30% or less or loses the status as the largest shareholder.

DIG Airgas is Korea's leading industrial gas provider founded in 1979 and acquired by MBK Partners in 2017.

In 2020, MBK Partners sold DIG Airgas, achieving a return of over 100% in less than three years.

Macquarie Group of Australia acquired the company from MBK Partners for USD 2.2 billion, with participation from a number of global LP investors, including the Government of Singapore Investment Corporation (GIC) and the pension fund of Alberta, Canada.

Yanolja is a Korean travel platform founded in 2005 that has grown into the country's largest online travel platform in just over 18 years.

In 2019, the company became a unicorn with USD 180 million in funding from Booking Holdings, a major US travel platform, and the Government of Singapore Investment Corporation (GIC).

In 2021, it was listed as a decacorn with a USD 1.7 billion investment from Japan's Softbank. Yanolja plans to go public in the coming years.