SEOUL, Sept. 6 (Korea Bizwire) – From now on, individual investors with funds below 500 million won (US$488,000) will be able to invest their money indirectly through a private equity fund while establishing private equity fund firms will be made easier.
The Financial Services Commission said on September 2 that a revised bill on the capital market and financial investment business has passed the cabinet meeting and will soon be submitted to the National Assembly.
A private equity fund, unlike a public subscription fund, recruits investment money privately from a small number of investors and makes high-risk, high-return investments. According to the revised bill, the private equity fund will be simplified into two types including the hedge fund and a type that involves in the invested company’s management. In addition, the initial allowable investment limit will be set at a single number.
Individual investors with more than 500 million won in investment fund will be able to make all kinds of private equity fund investment. But those investors whose fund amount is less than 500 million won will have to use a public subscription fund (an indirect private equity fund) that invests more than 40 percent of the assets in a private equity fund.
The minimum investment share of such funds has been reduced to 40 percent from previous 50 percent. The number of private equity funds that the subscription fund must invest in was also reduced to three from five as part of the deregulation measure. Other indirect investment funds will be able to invest in private equity funds within the limit of 5 percent of total assets.
A Financial Services Commission official said, “Once the private equity fund market grows to a certain size, we will strengthen regulation on investment diversification and others.” He also said that the revised bill will be submitted to the National Assembly within this month and is expected to be enforced by early next year.
By Sean Chung (firstname.lastname@example.org)