Dealmaking activity in South Korea has rebounded from the lows of the Covid-19 pandemic since the start of July, but there is still a scarcity of large deals for private equity investors.

The total value of corporate acquisitions completed in the first nine months of 2020 declined 11% year-on-year to 33.96 trillion won ($29.77 billion), according to data compiled by thebell. The decline was largely due to the impact of the pandemic, which slowed dealmaking and slashed valuations.

However, there are signs of a strong recovery, with the total value of announced deals in the three months from July to September amounting to 12.69 trillion won, up more than 24% from the same period a year earlier.

There was a mix of small and large deals in this period, including acquisitions of conglomerates’ affiliates that were offloaded as part of restructurings. Doosan Solus, Neoplux and Doosan Corporation Mottrol were all shed by cash-strapped Doosan Group, and there were investments in minority stakes.

But there have been few big deals for large buyout firms, which need to put part of their cash holdings to work, industry watchers said. Only four of the deals under negotiation – sales of minority stakes in SK Lubricants and Hyundai Global Service and buyouts of Doosan Infracore and Metanet Mplatform – are expected to have a transaction value of more than 500 billion won.

Deals of this size due to be completed by the end of the year include SK Engineering & Construction’s purchase of EMC Holdings (1 trillion won), Hahn & Co’s acquisition of Korean Air Lines’ in-flight business (990 billion won) and SkyLake Investment’s acquisition of Doosan Solus (700 billion won).

“Most of the buyout targets on the market are not so attractive in terms of their growth potential, while a few attractive ones are only seeking to sell minority interests,” said an official at one private equity firm in Seoul. “There are potential buyout targets that are in financial trouble but they have kept holding out by raising money from capital markets.”

SK Lubricants and Hyundai Global Service, which are looking for outside investors, have positive potential growth. But their sellers, SK Group and Hyundai Heavy Industries Holdings respectively, want to retain control of the businesses, which could reduce interest from large buyout funds.

Other targets on the market, such as CJ Foodville’s bakery chain Tous Les Jours and LG Hausys’s auto materials business, are less attractive to buyout firms due to their low growth outlooks and the smaller size of the transactions.

“Large private equity firms looking to deploy uninvested capital have been showing some interest in businesses that are being marketed, but it remains to be seen whether they have an actual desire to buy them,” said an industry insider. (Reporting by Hee-yeon Han)