IMM Investment will allow its fund managers to invest in private equity (PE) and venture capital (VC) funds regardless of their positions, industry sources said.
From this year the managers will invest around 1% of total fund size, in what is seen as an attempt to make them take greater responsibility for managing funds. The manager could earn both carried interest and returns after liquidating the fund.
Blind-pool funds have different periods of maturity, but it normally takes eight to 10 years or more from creation to liquidation. Fund managers that have invested in a particular fund won’t be able to freely change their jobs in the short term.
“It is common for fund managers to invest in their own funds in overseas markets, but not so in the domestic market,” said an industry source, adding, “It is positive in that profits can be distributed more fairly to fund managers.”
IMM Investment has received a positive response from institutional investors. “With general partners’ fund managers investing in their own funds, the interests between general partners and limited partners are bound to be more consistent,” said an industry source, adding, “Fund managers’ sense of professional responsibility will be further encouraged.”
Another source said: “It may not seem much when the proportion of a fund manager’s investment is 1%, but when the fund size is 200 billion won, the manager will invest around 20 billion won, which could be quite a burden for the manager.
“If the fund manager decides to make an investment despite this burden, institutional investors will certainly appreciate the responsibility the fund manager and the management firm will have taken.”
IMM Investment is currently raising funds for multiple funds and is competing for a New Deal fund mandate in the category of funds worth less than 120 billion won. If it is selected, IMM Investment will create a 120 billion won VC fund, with a leading manager of the fund expected to invest 1.5 billion won.
The firm is also raising funds for its mezzanine blind-pool fund Petra 8. It held an initial closing last month and is planning a second closing by the end of this year. In addition, IMM Investment said it hopes to launch a new infrastructure fund this year. (Reporting by Byung-yoon Kim)