Regulator to Ease Rules on Private Equity Funds | Be Korea-savvy

Regulator to Ease Rules on Private Equity Funds

(image: Korea Bizwire)

(image: Korea Bizwire)

SEOUL, Sept. 27 (Korea Bizwire)The financial regulator said Thursday it will ease some rules on local private equity funds, with the aim of removing outdated restrictions on the industry and spurring competition with foreign rivals.

Under the move, the Financial Services Commission (FSC) said it will allow local private equity funds to have 100 or fewer investors, who are typically called “limited partners” that control such funds.

Currently, domestic private equity funds are allowed to have 49 or fewer investors, limiting their capability to attract investment funds.

The FSC will also remove restrictions that have prompted local private equity funds to avoid investing into big firms.

Domestic private equity funds are required to buy more than a 10 percent stake in a big company if they seek to engage in the firm’s management.

The restriction is viewed as unfair for local private equity funds because foreign rivals can engage in a big company’s management with a smaller stake in the company.

Choi Jong-ku, chairman of the FSC, said in a statement that, “The playing field has been titled” against local private equity funds and that the regulator will help local private equity funds compete fairly with foreign rivals.

At the end of June, the number of local private equity funds stood at 501, and their total commitment amount came to 66.5 trillion won (US$59.8 billion), according to the FSC.


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