Korea Investment Private Equity (KI PE) is ready to start a new chapter in its history in 2021, after registering major achievements in terms of fundraising and exits this year.

The private equity arm of Korea Investment Holdings launched three blind-pool funds in 2020, including one focused on companies in the material, parts and equipment sectors. It coincided with efforts by the South Korean government to support these sectors after trade tensions escalated between South Korea and Japan last year.

Seoul-based KI PE and partner SKS Private Equity secured a mandate from Korea Development Bank and fund-of-funds operator Korea Growth Investment Corp (K-Growth) as anchor investors, and the fund also had commitments from institutional investors like the Pension Foundation of the General Assembly of the Presbyterian Church of Korea. KI PE closed the fund in August at 130.4 billion won ($120 million).

The firm also started to raise a fund focusing on distressed and special situations, with SG Private Equity as a co-general partner. In the past six months the fund has secured commitments from major domestic investors, such as K-Growth and the Korean Federation of Community Credit Cooperatives. KI PE plans to hold a first close at around 245 billion won in coming weeks, with a final close expected in the first quarter of 2021.

Meanwhile, a healthcare fund is being raised that will be jointly managed by KI PE and the PE unit of Hanwha Asset Management. The fund has collected about 90 billion won toward a 120 billion won target and KI PE hopes it can be closed by the second quarter of next year.

Active fundraising is in line with the firm’s efforts to diversify away from energy and infrastructure and expand to other areas of investment.

There were also notable exits during the year. KI PE completed the sale of its stake in Dreamline in a deal that valued the information technology services company at 100 billion won, 50% higher than its value when KI PE first attempted to sell the firm in 2018. The exit generated an internal rate of return of 27.8%.

Plenty of dry powder

Dreamline was heavily insolvent with a net liability position when it was acquired in 2016. KI PE focused on improving the company’s financial standing by injecting cash to pay down debt and refinancing existing long-term liabilities at lower rates.

The business focus of Dreamline was also shifted to the internet data center market, which is growing rapidly on the back of digital transformation. As a result, the company’s debt ratio declined to 175.9% at the end of 2019, from over 2000% in 2016. The operating profit margin increased to 12.5% in 2019, from 5.2% a year earlier.

KI PE also exited from its investment in Korea Asset Pricing Corporation this year, generating a 22% internal rate of return.

If the funds currently being raised are closed as scheduled, KI PE will have five active blind-pool funds next year, providing unused capital of almost 500 billion won that is likely to make the firm more active in mergers and acquisitions in the coming year.

The company has been recruiting more investment specialists, and creating new teams dedicated to overseas investments and investor relations. KI PE also intends to launch a co-investment fund, with managing director Andrew Joo, who leads the firm’s overseas investment team, expected to play a central role.

“We have had significant achievements in fundraising this year,” said a KI PE official. “Next year we will focus on investing in a variety of sectors to build a strong track record.” (Reporting by Byung-yoon Kim)