According to Yonhap News,

(SEOUL=Yonhap News) South Korea's private equity investment funds raised a record 10.2 trillion won (US$8.9 billion) last year as investors sought higher returns amid declining rates, the financial regulator said Monday.

It was the first time for homegrown private equity funds (PEFs) to collect funds worth over 10 trillion won since 2004 when the government passed regulations allowing the operation of PEFs in Asia's fourth-biggest economy, the Financial Supervisory Service (FSS) said in a statement.

The funds raised last year climbed 4 percent from 9.8 trillion won a year earlier.

The local PEFs executed a combined 12.8 trillion won last year to participate in local major M&As. Their investments jumped 161 percent from 4.9 trillion won a year earlier.

For example, a consortium led by MBK Partners bought Homeplus, the Korean unit of British retail giant Tesco Plc, for 7.2 trillion won in September. MBK Partners injected 2.9 trillion in the largest private equity deal in Asia by that time.

A consortium led by Hahn & Co. invested 2.8 trillion won to acquire Hanon Systems, a supplier of auto parts to Hyundai Motor Co. and Kia Motors Corp., in June.

"As nearly 90 percent of investments by local PEFs were focused on domestic companies, the PEFs need to look overseas for diversification and longer-term growth," an FSS official said.

He said the PEF market will grow further as more financially troubled companies are set to be put up for sale and pension funds expand their alternative investments. The number of Korean PEFs rose 15 percent year-on-year to 316 last year.

kyongae.choi@yna.co.kr

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