SEOUL, May 10 (Korea Bizwire) – Transactions by South Korea’s private equity firms slipped 30.4 percent on year in 2016 amid a lack of mega buyout deals, government data showed Tuesday.
Local private equity groups invested a total of 8.9 trillion won (US$7.8 billion) last year, compared with deals worth 12.8 trillion won in 2016, according to the data by the Financial Supervisory Service.
In a statement, the financial regulator attributed the sharp decline to a lack of big merger deals last year. In 2015, local private equity firm MBK Partners clinched an over $6 billion deal for Tesco’s Homeplus stores in South Korea.
Last year’s investment by private equity funds was at a similar level of a three-year average investment of 9 trillion won, it said.
The financial regulator said the local private equity groups have played a leading role in the nation’s buyout markets.
The private equity firms are “expected to grow further as alternative investment by institutional investors will increase and the merger and acquisition market has been expanding,” it said.
At the end of last year, there were 383 private equity groups with assets under management of 62.2 trillion won, according to the regulator.
South Korea’s private equity funds have shown rapid growth since the government eased regulations to promote local buyout funds in 2004.
Still, private equity investment by local funds has largely centered on Korean firms.
Last year, Korean firms accounted for 86.5 percent of the total investment by local private equity groups, according to the data.
The regulator said it will encourage some eligible private equity funds to expand their business range into foreign buyout deals.