Thiel’s Crescendo bets on tech with $410m fund

Crescendo Equity Partners is Korea-focused and concentrates on buyouts and minority growth investments in technology and export-oriented firms.

Mid-market firm Crescendo Equity Partners has raised 450 billion Korean won ($410 million; €360 million) for its second and largest flagship vehicle focused on Korea’s technology sector.

The Seoul-based firm began fundraising in April last year with a 300 billion won target and wrapped up fundraising after one year.

All limited partners in the firm’s debut fund re-upped commitments in Fund II, Kevin Lee, founding partner of Crescendo, told Private Equity International. Korean LPs such as pensions, and financial institutions made up the bulk of Fund II’s investor base, Lee added.

Crescendo Equity Partners Fund I is a 2015-vintage fund that raised 74 billion won across its main fund and parallel vehicles.

Crescendo is also sponsored by PayPal co-founder and venture capitalist Peter Thiel, according to the firm’s LinkedIn profile.

Capital raised from Fund II will be invested primarily in mid-cap Korean companies focused on technology and manufacturing, in both buyout and minority growth strategies.

Fund I is fully deployed and half of the portfolio has been exited, including investments in Sanghin Electronics and Hanmi Semiconductor. The fund has returned 1.2 times invested capital to LPs, Lee said.

South Korea has been ranked as the world’s most innovative country in terms of research and development spending, value-add manufacturing and patent activity, according to the 2018 Bloomberg Innovation Index. The nation is also home to world’s fastest internet connection and ranks first in e-government as well as second in the Information and Communication Technologies Development Index, published by the International Telecommunications Union, a United Nations agency.

Most Korea-focused private equity firms are interested in consumer and financials industries because of steady cashflows, demographics and domestic consumption, according to The continued rise of South Korean private equity by McKinsey and Company.

Technology, media and telecommunications ranked fifth among industries favoured by private equity firms investing in Korea from 2005 to 2014, the report found. Consumer-focused investments made up 20.6 percent of PE transactions, followed by industrials at 18.8 percent, financials institutions at 18.3 percent, and infrastructure at 17.1 percent. Electronics, global energy and materials, as well as healthcare comprised 8.5 percent, 5.6 percent and 2.5 percent, respectively.

Industrials remains attractive because they present GPs with opportunities for operational improvement and restructuring balance sheets.