Private Equity Funds’ AUM Increasing Fast

Private Equity Funds’ AUM Increasing Fast




The private equity fund (PEF) industry is rapidly growing in South Korea. PEFs have acted as problem solvers in the succession processes of large corporations that entail the necessity of avoiding anti-monopoly regulations and making a change in governance structure. In addition, the South Korean government has reduced regulations by amending the Financial Investment Services and Capital Markets Act and their assets under management (AUM) are increasing fast as a result.

Preqin announced on Sept. 1 that the assets managed by PEFs totaled US$171 billion at the end of 2021, up 27 percent from the end of 2020 and 69 percent from the end of 2019. According to the market research agency, the rapid growth of the South Korean PEF industry is being led by venture capital investment and buyout. These segments accounted for 39 percent of the AUM last year, three times the Asia-Pacific average. Buyout deals exceeded US$16 billion last year, totaled US$11 billion in the first half of this year, and are estimated to reach US$17 billion at the end of this year.

According to Preqin, South Korean conglomerate owners are increasingly utilizing buyout PEFs in trying to avoid antitrust fines and disposing of non-core assets and more and more major shareholders in non-large companies are also regarding PEF as their succession solution.

When it comes to venture capital, government and corporate venture capitals are playing an active role in startup growth. The ratio of venture capital increased to 34 percent of the AUM last year, when venture capital fundraising increased 23 percent to US$6.6 billion.

“Last year, private lending AUM grew fastest among all alternative asset groups, and this has to do with the amendment that allowed PEFs to increase their stock and loan assets,” the agency pointed out, adding, “As a result, their stock and venture capital AUM increased to US$134 billion last year.”

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