South Korea relaxes fundraising rules

South Korea has made reforms to regulation around private funds in order to reduce restrictions for managers.

After much deliberation, the South Korea government amended its Financial Investment Services and Capital Markets Act (FSCMA) in order to make it easier for managers to raise funds in the region.

The act, which came into effect late last year, is expected to have a significant impact on the number of private fund investments made in South Korea, particularly impacting real estate investments that are made via private funds.

The reform introduced the “private collective investment vehicles for professional investment”, which allows companies to invest in funds comprising of any type of asset.

Prior to the reforms, the FSCMA restricted fund managers investment strategies by classifying private fund types into separate areas, such as real estate, securities and special asset funds depending on the primary targeted investment asset. In the case of real estate funds, for example, the scope of items accepted as real estate investments was severely restricted.

The reforms also make it easier for firms in South Korea to obtain private fund licenses, said Eui Jong Chung, attorney at South Korean-based law firm Bae, Kim and Lee, in an interview with Private Equity International's sister title pfm.