[PE Moving to Retail] ① Institutional Investors Smell Money from High-Net-Worth Individuals and Private Equity Funds

Global PEF Individual Client Ratio Target Raised from 20% to 30%
Aggressive Retail Market Sales Begin as High-Net-Worth Clients Increase
Domestic Large PEFs Limited to Institutions, Facing Barriers with Individual Clients

"Global private equity funds (PEFs) that have caught the scent of money are moving into the retail market."

Recently, global PEFs such as Blackstone, Kohlberg Kravis Roberts (KKR), and Carlyle have been rolling out specialized products targeting family offices both domestically and internationally. A family office refers to a service that manages and allocates assets, handles inheritance and gift trusts, and oversees business succession for high-net-worth individuals or corporate owner families.

A senior official from a domestic PEF stated, "Global PEFs, which have so far focused mainly on institutional clients and barely paid attention to individual clients, are entering the retail market because the pace of institutional investment is slow while the wealth growth of high-net-worth individuals is rapidly accelerating. In the past, global PEFs operated like secret organizations, providing no information to individual clients, but now they are creating investor education sites and starting general investor education like asset management firms, marking a significant trend change."

Blackstone, with assets under management reaching 1,400 trillion won, has raised its target proportion of individual clients in its total funds from 20% to 30%. Other global PEFs such as Goldman Sachs, Carlyle, and KKR are also aggressively expanding into retail. Domestically, securities firms that have many touchpoints with high-net-worth individuals are selling global PEF products as part of VIP client management. In this field, Korea Investment & Securities and Samsung Securities stand out. Korea Investment & Securities partnered with Carlyle to launch products aimed at individual clients. Samsung Securities opened a dedicated branch for family office business. By introducing PEF product investment opportunities, which were previously available only to institutional investors, to high-net-worth individuals, they are supplying products from global PEFs like Goldman Sachs and Carlyle to the domestic market. In particular, Goldman Sachs' private lending fund reportedly gained great popularity by raising $40 million (approximately 50 billion won) from individual clients.

For individual clients, the redemption period has also shortened to cycles of 6 months to 1 year. Previously, the PEF market centered on institutions mainly featured products with maturities of over 10 years, but to cater to retail clients, funds with shorter redemption cycles have emerged. This is positive in terms of increasing individual clients' options. Global PEF loan funds diversify investments across as many as 3,000 assets. They attract attention because they offer risk diversification while expecting double-digit returns. Reflecting this customer interest, global PEFs are significantly expanding their retail sales organizations and strengthening their sales capabilities.

The fact that global PEFs are taking the lead in the rapidly growing family office market is seen as a regrettable point in the domestic investment banking (IB) market. The domestic PEF system is divided into general PEFs and institution-only PEFs, limiting financial consumer access to competitive large-scale PEFs. An IB industry insider said, "Global large PEs are open to individual clients so that high-net-worth individuals can invest, but most domestic large PEFs are institution-only, so they cannot offer products targeting individual clients. It is unfortunate that the domestic system is institutionally blocked from following global trends of securing consumer choice and diversified investment."