H&Q raises $480m for Korean buyouts

H&Q Asia Pacific, a private equity fund manager focused on investments along the Pacific Rim in Asia, has closed a domestically raised buyout fund, and is nearing the close of smaller fund being raised from overseas investors.

South Korean private equity firm H&Q Asia Pacific has raised W372.5 billion ($332 million; €228 million) for its second Korea-focused fund and expects to close a third fund soon on as much as $150 million.

The second fund, H&Q Private Equity Fund II, has been raised entirely from domestic investors, with South Korea’s $233 billion National Pension Service as the anchor investor, an investment professional at H&Q Asia Pacific told PEO. The pension committed $200 million.

The mid-market fund has a seven-year investment period and will target manufacturing, consumer industries and financial companies with steady cash flows, the professional said.

Seoul: buyout destination

Seoul: buyout destination

The firm is simultaneously in the market with another fund, Korea Alternative Capital Partners, which is being raised entirely from overseas investors and is targeting between $100 and $150 million. It is expected to close in a month or two.

Following the closing of the overseas fund, the firm will make investments from both the funds in the same deals on a pro-rata basis, depending on how much the overseas fund raises.

The firm’s first third-party fund also had the National Pension Service as the anchor investor, as it was in the firm's H&Q NPS Private Equity Fund I, a $300 million fund to which the pension committed $200 million. That fund is fully invested in five deals.

H&Q was originally founded as a division of the US investment bank Hambrecht & Quist, and is currently an independent organisation making both venture capital investments and later-stage control investments. It has managed a total of $2.3 billion across a mixture of 21 proprietary venture capital and buyout funds since launching its private equity programme in 1985.

The firm has offices in Seoul, Palo Alto, Hong Kong, Manila, Tokyo, Shanghai and Taipei.