Korea to relax PE rules

The head of South Korea’s Financial Services Commission (FSC), Shin Je-yoon, is expected to abolish or increase the limit qualified individuals can invest in domestic private equity funds, according to a local media report.

The current limit on individual investors’ investment in private equity is KRW1 billion ($944,000; €686,000).

Je-Yoon said he wanted to promote the asset management sector by revamping private equity regulations. As well as encouraging individual investors to park cash in the asset class, Je-Yoon will also shorten the mandatory real estate ownership period from the current five years to possibly as short as 12 months.

Korea’s current private equity funds framework was enacted in 2004 as a revision of the Financial Investment Services and Capital Markets Act. Korean funds must be formed as limited partnerships and consists of 49 or less professional investors.

Increasing the checks individuals can write to Korean fund managers comes amid a flat fundraising environment in Asia. Asia Pacific funds raised a total of $20 billion during the first nine months of 2013, equal to the amount raised during the same period in 2012, according to PEI's Research & Analytics division.

But there have been a few success stories, such as startup firm Anchor Equity Partners, who bucked the general fundraising trend by raising a debut $500 million fund for Korea after a year in the market.

The firm’s success is likely due to its investment team’s track record. Anchor was formed in August 2012 by a handful of Goldman Sachs veterans to target deal opportunities in Korea.

Managing partner Sanggyun Ahn, in his previous role at Goldman, worked on several high-profile Korea deals. He was on the investment team that bought a stake in Kookmin Bank, which Goldman exited in 2003, and he led the investment in Hana Financial Group, which the firm exited in February last year.