Hahn & Co hauls in $3.2bn for largest Korea fund

The buyout firm gathered $2.7bn for its third flagship fund and a further $500m for a co-investment sidecar.

Hahn & Co has held the final close on the largest ever fund dedicated to Korea.

The Seoul-based firm gathered $3.2 billion in total capital commitments, which includes $2.7 billion for the flagship fund Hahn & Co III and an additional $500 million for a co-investment fund that will invest alongside Fund III, according to a statement.

Capital raised for Fund III and its co-investment sidecar is almost 50 percent more than the second-biggest fund focused on the country, Korea Development Bank’s KDB Value Private Equity Fund VI, which gathered 2.75 trillion won ($2.2 billion; €2 billion) in 2009.

More than 90 percent of existing investors in Hahn & Co’s previous funds re-upped in Fund III, Scott Sang-Won Hahn, chief executive of the firm, told Private Equity International. He added that close to 40 percent of the fund’s LPs are from North America and the remainder from Europe, the Middle East and Asia.

Pennsylvania State Employees’ Retirement System is a repeat investor, committing $75 million to Fund III – $25 million more than it invested in Fund II, according to PEI data.

Other investors in Fund III include New York State Common Retirement Fund, which committed $125 million; New York State Teachers’ Retirement System with $100 million; and Pennsylvania Public School Employees’ Retirement System with $150 million.

Fund III is around 1.6 times larger than its 2015-vintage predecessor, which gathered $1.2 billion against a $900 million target. Capital raised for Fund III will follow the same strategy as Hahn & Co’s previous vehicles, acquiring control stakes mainly in industrial companies including Ssangyong Cement and automotive company Hanon Systems.

Korea-dedicated managers on the fundraising trail include IMM Private Equity, which had raised $1.3 billion out of its $1.5 billion target for IMM RoseGoldIV; Anchor Equity Partners, which is raising its third fund with an undisclosed target; and VIG Partners, which held a $530 million first close in May for its fourth fund, which is targeting $800 million, according to PEI data.

South Korea is one of the most attractive private equity markets in Asia, with dealflow driven by carve-out opportunities in large industrial companies. PE-backed transactions reached $9.8 billion as of September 2019 and is on track to surpass the $11.3 billion worth of investments in 2015, according investment advisory firm BDA.

Read PEI‘s guide to Korean private equity here.