SOUTH KOREA Trends and Developments Contributed by: Je Won Lee, Kyu Seok Park, Dahye Cho and Justin Kim, Lee & Ko
Lee & Ko Hanjin Building 63 Namdaemun-ro Jung-gu Seoul 04532 Korea
Tel: +82 2 772 4805 Fax: +82 2 772 4001 Email: koo@leeko.com Web: www.leeko.com
Current Overview of Private Equity Funds in Korea Market share Private equity funds continue to account for a sig - nificant share of the M&A market in Korea. In 2024, transactions involving funds constituted approxi - mately 34.5% of the total M&A deal count, reflecting a modest increase from 2022 levels (31.7%). Of the 817 M&A deals reported in 2024, an estimated 282 deals involved private equity sponsors, indicating the sustained presence of private equity as a key driver of deal flow. While the total number of reported deals has declined over recent years – from 1,123 deals in 2022, to 861 in 2023, and further to 817 in 2024 – the proportion of private equity-involved transactions has remained sta - ble or slightly increased. In value terms, transactions involving funds represented approximately 32–35% of the total reported M&A value in 2024, consistent with the 34% share recorded in 2022. However, the aggre - gate deal value of PE-backed transactions in 2024 has yet to return to the 2021 peak of USD60.1 billion. In terms of fundraising and market size, Korea’s pri - vate equity sector also experienced continued growth. As of the end of 2024, the total assets under man - agement of domestic private equity funds exceeded KRW700 trillion, up from KRW623.1 trillion in 2023. Fundraising activity remained robust, with Korean private equity firms collectively raising an estimated KRW70 trillion in new capital throughout 2024. When combined with public funds, the total net assets of the domestic fund market surpassed KRW665 trillion, while overseas funds accounted for KRW327 trillion,
representing 16% and 10.2% year-over-year growth, respectively. These trends highlight the resilience and strategic role of private equity in Korea’s M&A landscape, even amid a higher interest rate environment and softer overall deal volumes. Trends in Korea’s private equity market (2022– 2025) Since the rise of interest rates in 2022, continuing into early 2025, private equity funds have faced mount - ing challenges in fundraising and deployment. Small - er general partners have scaled back project fund activity, while larger general partners are focusing on deploying dry powder from blind funds. Joint invest - ments among multiple funds have become more prev - alent, particularly after a 2021 amendment to Korea’s Financial Investment Services and Capital Markets Act (FISCMA), which eased distinctions between general and institutional private funds. Co-investments now often involve various fund types. Additionally, institu - tional funds increasingly favour downside-protected structures, such as redeemable convertible preferred shares, put options, convertible bonds and subordi - nated LPs, reflecting a market shift towards capital preservation over upside potential. Recent Trends in the Korean Private Equity Fund Market Joint investments between private equity funds and strategic investors are on the rise This trend stems from the amendment to the FISCMA in 2015 allowing for:
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