The Export-Import Bank of Korea (KEXIM) will soon announce which external manager will invest its 75 billion won ($61 million) of funds, in what will be the first transaction from the bank to a private equity fund (PEF) operator in two years.
PEF industries are paying close attention to the investment, as are hidden limited partners (LP).
According to investment banking industry reports on May 21, KEXIM will name the external manager for its Global BioHealth-K Fund as early as this week. KEXIM is making the PEF investment to promote exports of domestic small and medium-sized companies and expand its overseas business. In April, KEXIM issued a notice to select external managers eligible to operate the fund, and has selected a shortlist of six after an oral screening process was completed last week.
The shortlist includes PEF operators with track records in the healthcare investment field, but also venture capital firms. Three or four operators will be chosen. If three companies are selected, 25 billion won will be allocated to each operator and if four companies are selected, it is expected that each will receive between 15 billion and 20 billion won.
KEXIM plans to make the final selection this week and then proceed to conduct on-site inspections. This process is quite different from that used by pension funds and mutual aid associations like Korea development Bank, which announce final results after an inspection. KEXIM is expected to conduct its inspections next week and all procedures will be completed by the end of May. The project is being carried out by the KEXIM financial investment department.
The bank has not previously attracted as much attention in the PEF industry from LPs compared with pension funds and mutual aid agencies. This is because investment projects for PEF operators are carried out every other year, and the total amounts in investments is not large.
Handling 25 billion won is still not enormous for an asset manager that makes blind funds worth hundreds of billions of won, but this deal cannot be missed. According to one industry source, the new KEXIM president has signaled his willingness to invest in PEF, so keen attention will be paid to his future moves. (Reporting by Hye-ran Kim)