“Global PEF Nesting in Seoul... Korea as Asia Investment Hub”

Korean Private Equity Market:
PEFs Emerge as Key Partners in Corporate Restructuring

In the Asia-Pacific (APAC) private equity market, South Korea is emerging as a strategic hub for global investors.

According to the 'Private Equity Investment Status in the Asia-Pacific Region' report released on the 11th by Deloitte Korea Group, major global private equity firms (PEFs) such as Apollo have established bases in Seoul and regard South Korea as a strategic investment center. Additionally, global capital interest in South Korea is increasing.

The report indicates that the APAC private equity market is expected to enter a full-fledged growth phase this year after overcoming uncertainties last year. The investment scale last year was $138 billion, an increase compared to the previous year. Although the number of deals slowed, market momentum is strengthening. This year, against the backdrop of falling interest rates and market stabilization, active investment activities by private equity fund managers (GPs) are anticipated.

Last year, a polarization phenomenon led by mega and micro deals became prominent as mid-sized transactions decreased. Over the past decade, the average buyout investment proportions based on deal value were roughly one-third each for large (top 2%), mid-sized (3?8%), and small (bottom 90%) deals. However, last year, large deals accounted for 42% and small deals 30%, while mid-sized deals remained at 28%, intensifying the polarization. The number of large deals exceeding $1 billion was 30, similar to 2022 and 2023, but the total deal value declined overall, causing the share of large deals to rise to 6.8% compared to 5.6% in 2023. Increased uncertainty and continued weakness in mid-sized deals fueled this polarization. As a small deal strategy, bolt-on (acquisition of similar companies) transactions emerged, accounting for 27?31.5% of disclosed deals from 2021 to 2024, doubling compared to the mid-2010s.

Last year, the APAC private equity industry was not in a hurry to exit investments. Notably, exits that had been halted reappeared in 2024 in the APAC private equity sector. According to the survey, among 1,734 buyout opportunities in APAC, 19.5% (338 cases) had been paused for more than six months after previous failed sales. These re-entries into the exit market were not simply due to changes in the macroeconomic environment or stock price adjustments. There was also a notable trend of private equity firms pursuing safety by leveraging past successful models or investing in similar assets and suppliers.

In particular, in the South Korean private equity market, PEFs have established themselves as key partners in corporate restructuring through divestitures of business units and acquisitions of non-core assets. PEFs are expanding their roles by reorganizing portfolios to allow companies to focus on core businesses and supporting more flexible restructuring. Furthermore, with an increase in undervalued companies (based on PBR), PEFs are actively engaging in corporate management beyond mere financial investment, concentrating on enhancing shareholder value.

The expansion of global PEFs into the Korean market is also a notable trend. Recently, global PEFs such as Apollo and ICG (Intermediate Capital Group) have established bases in Seoul, strengthening South Korea’s role as both a capital sourcing location and a new investment hub.

Nam Sang-wook, One M&A Leader of the Management Consulting Division at Deloitte Korea Group, stated, “As the APAC private equity market gains attention, we observe polarization in deal sizes, changes in exit strategies, and high interest in the Korean market. We hope this report helps investors and industry stakeholders understand market trends and make optimal decisions.”