Korea’s biggest private equity fund to launch

Korea Development Bank reportedly will announce the formation of a South Korean-based private equity fund with won 340 billion in assets.

Seoul-based Korea Development Bank (KDB) is set to launch a private equity fund next month with assets of approximately won 340 billion ($338 million; €256 million).

Reportedly, four or five financial institutions have expressed interest in joining the fund, which is slated to be the largest of its kind in South Korea.

According to a bank announcement earlier this week, the KDB No. 1 Private Equity Fund will start investing from April. Reportedly, potential investors include the National Agricultural Cooperative Federation and the National Pension Corporation.

According to KDB, the new fund will provide capital for medium-sized domestic companies going through restructuring, regardless of industry segment, and will hold the business for three to five years.

Until recently, the South Korean financial authorities effectively banned local private equity funds in an effort to attract foreign investment following the 1997 economic crisis. New rules have reversed this foreigners-only policy and have also given local funds an exemption from holding-company and fair-trade rules for 10 years.

Currently, Korea’s biggest private equity fund is a won 210 billion ($209 million; €158 million) fund recently set up and backed by Woori Bank. The Mirae private equity fund, managed by Mirae Asset Partners and 54 percent owned by Mirae Asset Securities, has won 100 billion ($100 million) under management. The fund is backed by pension funds and “other financial investors”, according to the report.

An additional local vehicle is expected from Kookmin Bank, which has announced plans to launch a fund with a target of between won 300 billion and won 500 billion.