STIC Investments has received $20 million from the South Korean Ministry of Knowledge Economy for its second mid-market private equity fund.
STIC Asia Mid-market Private Equity Fund II was launched in November 2008 and is targeting commitments of $500 million. The fund will acquire substantial interests in mid-sized private sector companies in Korea and in other Asian companies that are related to Korea or are seeking to enter the Korean market.
The fund is likely to see a first close on between $150 million and $200 million by June this year, and a final close is expected by the end of the year, Trevor Chan, a director at the firm, said in an interview. It will focus on investments in the technology convergence and manufacturing sectors in industries such as shipping, automotives and renewable energy, Chan said.
The Korean mid-market continues to offer significant investment opportunities in expansion capital, growth buyouts and PIPEs despite the global economic downturn, Chan said. He said that this was due to the existence of more than 100,000 competitive mid-market private companies with enterprise values of between $50 million and $500 million.
STIC’s predecessor fund closed on $150 million in May 2006. It has deployed about 90 percent of its capital across 17 deals, Chan said. He added the firm has made six exits so far and will exit another three to four before the end of the year.
In October 2008, STIC Investments closed its second direct secondaries fund on approximately $369 million.
The $20 million anchor investment from the Ministry of Knowledge Economy is a part of a $60 million initiative called “New Growth Momentum”, which the Korean government launched in the beginning of 2009 to boost a slowing economy.
As part of the programme, the Ministry has also committed $20 million each to US-based Burrill & Co, which is focused on biotech and life science, and C Change Investments, which is raising a green energy fund in partnership with Korea Investment & Securities, a source said. A total of 35 private equity firms, both domestic and foreign, have applied for the funds.