South Korean private equity firm Pine Tree Partners may face reputational risk as the key fund manager it proposed as a manager of Korea Growth Investment Corporation (K-Growth)’s 2020 corporate restructuring fund has left.
Pine Tree Partners applied for the private equity fund (PEF) sector of K-Growth’s 2020 corporate restructuring fund on June 30 but the PE firm has suddenly dropped out of the process after submitting its proposal.
Domestic PE industry sources said the fact that Han-wool Kim has left the firm seems to have had a direct impact on the Pine Tree Partners giving up the project. Kim was one of the key fund managers specified in Pine Tree Partners’ proposal. Applicants had to have more than three fund managers to be selected as a manager by K-Growth.
The problem was that the fund manager quit his job after the firm’s proposal submission. Pine Tree Partners asked K-Growth if it could re-submit its proposal after reflecting the change in its key fund manager but K-Growth didn’t allow the firm to do so, citing the deadline had already passed.
Market insiders said it is such a rare case that a management firm drops out of an investment project. “It is rare that an applicant drops out in the middle of the process and it is even rarer that the firm drops out due to the change of a fund manager immediately after a proposal submission,” said an institutional investor who is in charge of an investment project.
Kim was responsible for major deals, including Skinfood and STX Heavy Industries, at Pine Tree Partners. He also played an important role in Pine Tree Partners’ recent acquisition of Dong-A Tanker. A PE industry source said that the way the fund manager left the firm isn’t quite acceptable considering he was considered loyal to the firm and was in charge of major deals there.
Some market insiders point out the firm may face reputational risks due to the latest incident. A key fund manager’s resignation would have a negative impact on its participation in future investment projects, they said.
Pine Tree Partners has not made any comments on either Kim’s resignation or it dropping out of the investment project. (Reporting by Byung-yoon Kim)