Foreign private equity firms now dominate large buyout deals in South Korea, accounting for over 80% of transactions above Won500bn ($370mn) this year, up from 60% last year and just over 10% four years ago, according to Dealogic. Advisers cite South Korea’s similarities to Japan—corporate carve-outs, governance reforms, and ageing founders—as drivers of growing interest. David Sim of PwC noted few Asian markets offer large-size deals for global buyout funds outside Japan and Korea.
South Korea represented 11% of Asia’s private equity investment last year, trailing Japan’s 25%, but investors are shifting focus amid a crowded Japanese market and reduced China exposure due to geopolitical tensions. Carlyle’s Icksoo Jung called Korea a “core market” for its Asia operations, citing larger deal flow as the economy matures. Total buyout volume rose 3% to $7.8bn year-to-September, with half in deals above Won500bn.
Succession pressures are a key catalyst, as baby-boomer founders face retirement and inheritance taxes up to 60%, prompting sales like Carlyle’s acquisition of water purifier maker Chungho Nais. Younggun Kim of EY Parthenon said high inheritance taxes often force founders to “sell their family silver.” Chaebols are also divesting non-core assets under new minority shareholder rights laws, with Lotte selling its car rental business to TPG and SK Group offloading renewable stakes to KKR to fund AI and semiconductors. Goldman Sachs’ Jaehoon Ahn noted growing AI and semiconductor ecosystem interest beyond chipmakers.
Foreign PE is filling a void left by cautious local firms after regulatory scrutiny followed the Homeplus debt crisis and MBK Partners investigation.
Source: Financial Times Companies · Summarized by HeadlinesBriefing