Yellow Umbrella, South Korea’s mutual-aid association for small and mid-sized business owners under Korea Federation of Small and Medium-sized Businesses (KBIZ), may delay its announcement of three private equity (PE) managers for its alternatives portfolio.
According to M&A industry sources on March 17, Yellow Umbrella has sent a letter to KBIZ stating the final three PE firms that will manage a combined 60 billion won ($50 million) of its blind commitments. Yellow Umbrella has selected three PE firms and notified them separately about two weeks ago.
However, it is likely to take longer to make announcements on the final result as KBIZ hasn’t approved the result yet. The problem is that a face-to-face reporting has to be done to receive an approval from KBIZ. Amid the outbreak of the coronavirus, it has become difficult to set the timing of the face-to-face reporting.
“It has been expected that Yellow Umbrella will announce the result by the end of last week, but given the outbreak of the coronavirus, it is likely to announce the final three external managers around next week,” said an industry source, adding, “As all other works have been completed including on-site due diligence, there won’t be a big issue other than the delay of the schedule.”
Yellow Umbrella is likely to visit KBIZ located in Daejeon this week to conduct the face-to-face reporting. The announcement on the final result is expected to be made around one week after the reporting.
Yellow Umbrella announced its investment program to provide a combined 60 billion won in capital commitments on January 17 and closed applications for its external alternative managers on February 7. Nine domestic PE firms and consortia have submitted proposals to obtain capital commitments from the mutual-aid association. This year Yellow Umbrella has removed the qualification that asset managers have a certain level of commitments from domestic institutional investors.
Starting from this year, Yellow Umbrella will choose external alternative managers twice a year, not just once. It has set a fund’s hard cap at 200 billion won. A maximum fund size is expected to be raised in the second selection process scheduled later this year. (By reporter Kim Byung-yoon)