United Asset Management Company (UAMCO), South Korea’s largest bad debt manager, will soon complete the creation of a joint blind-pool fund with IBK Securities to invest in firms undergoing restructuring because of the Covid-19 pandemic.
A 200 billion won ($174 million) blind-pool fund is being formed to attract capital to support distressed companies, with more than 80 percent of the targeted amount already raised thanks to UAMCO’s expertise in the domestic restructuring market and IBK Securities’ deal sourcing capability. It is expected to be completed by the end of this year.
The process has been undertaken in unfavorable conditions, as it overlapped with the restructuring of other firms. Korea Growth Investment Corporation (K-Growth) also hired private equity fund managers Ever Best Partners/Hana Financial Investment, Korea Investment Private Equity/SG Private Equity and Fine Investment/KB Investment in July to create restructuring funds.
However, UAMCO’s successful exit from domestic industrial paper maker Seha has had a positive impact on investor sentiment in the restructuring market.
“Competition for capital is heating up as multiple restructuring funds are being created simultaneously,” said an industry source. “Corporate restructuring funds of K-Growth are having trouble raising capital while UAMCO appears to be finishing its funding relatively smoothly.”
Market insiders widely expect the domestic restructuring market to expand sharply in the near future as industries like aviation, automotive and retail have been hit hard by Covid-19.
UAMCO, which has been very active with distressed companies since the onset of Covid-19, will start investments at the end of this year or early next year. Its investments this year include stakes in auto parts supplier JM Advanced Materials, marine parts supplier STACO and power transformer producer TCT. (Reporting by Se-hun Jo)