South Korean mid-market private equity firm SG Private Equity (SG PE) has raised 90 billion won ($75.4 million) from the Corporate Restructuring Fund, a fund of funds run by government-funded Korea Growth Investment Corporation (K-Growth), industry sources said.
K-Growth selected three consortia of investment firms, including a consortium of SG PE and Korea Investment Private Equity, to allocate a combined 200 billion won ($168 million) to distressed private equity investments, according to the announcement by K-Growth on July 30.
With K-Growth being an anchor investor in its new fund, the consortium will raise more money from private investors for the next four months. The fund aims to raise 180 billion won or more.
The announcement came a few months after SG PE closed a fund that was focused on growth companies and buyout opportunities, with capital commitments of 500 billion won from investors including the National Pension Service and Korea Development Bank. The firm has a strong track record in distressed investing, with its 63 billion won fund investing in bankrupt companies liquidated at an internal rate of return of 21.5% earlier this year.
“Some investment firms were said to have decided not to submit proposals [to K-Growth] as they concluded their track records in distressed investing were not strong enough to compete with SG PE,” an industry insider said.
SG PE has made a string of investments in recent months. It invested 10 billion won in content developer and provider Takeone Company in April, which marked the firm’s first growth capital investment to date. The firm also invested 6 billion won in animal healthcare company Sungbo Pet Healthcare in June and bought a minority stake in overseas payment services provider Eximbay in July.
The firm’s 500 billion won fund, and the fund that is in the process of raising money, will be managed by separate teams as the investment strategies of each fund differ. With a large amount of uninvested capital, SG PE is expected to be more active in the mergers and acquisitions market in the second half of the year, industry watchers said. (Reporting by Se-hun Jo)