South Korea’s private equity firms are actively trying to bolster their existing alternative investment business to provide comprehensive alternative investment solutions. Some firms newly establish overseas or real estate, energy and infrastructure investment divisions while others form separate alternative investment subsidiary.
South Korea’s private equity firm SKS Private Equity (SKS PE) has recently created alternative investment division to invest in real assets including real estate and infrastructure, according to investment banking industry sources on April 2. SKS PE, which was separated from SK Securities in 2019, will now have three divisions – strategic investment division and PE investment division and alternative investment division.
Prior to SKS PE, Stonebridge Capital established its subsidiary Stonebridge Alternative which will handle investments in real estate and infrastructure. Stonebridge Alternative is currently undergoing a process to obtain a business license from South Korea’s Financial Supervisory Service (FSS) to do asset management business. The firm is likely to get the nod by the end of April despite the possibility of delay due to the spread of the coronavirus.
Stonebridge Capital attempted to invest in energy and infrastructure via a private equity fund vehicle in the past. Stonebridge Capital has nonetheless decided to obtain the license as investing in energy and infrastructure without the license has limitations. With the establishment of Stonebridge Alternative, Stonebridge will become the alternative investment firm that provides comprehensive services including private equity fund (Stonebridge Capital), venture capital (Stonebridge Ventures), and real estate and infrastructure (Stonebridge Alternative).
IMM Investment is also a major player in infrastructure investment space. IMM, which has been an investment firm specialized in venture capital investments, has expanded its business to infrastructure. The firm recently established its Hong Kong-based subsidiary ICA to make investments in Asia Pacific region. ICA received an asset management business license from the Hong Kong financial regulator last month. The firm invested one trillion won in the U.S. Texas Express Pipeline project at the end of last year.
In 2018, STIC Investment established STIC Alternative, its real estate and infrastructure investment firm. LB Investment also created its real estate investment firm LB Asset Management in 2016.
Private equity funds are enhancing their real estate and infrastructure investment business in a bid to meet investors’ demand. Domestic pension funds and mutual aid associations tend to manage all types of alternative assets including private equity funds, venture capital, real estate, infrastructure and hedge funds though their investment management department.
Market insiders said private equity firms have to mull over expanding their business to encompass other alternative assets including real estate and infrastructure in order to provide limited partners with comprehensive portfolio management services. At the same time, private equity firms can create synergy by doing so.
(By reporter Kim Hye-ran)