[Private Equity Network Analysis①] Core Private Equity Network Grew Up Amid the 'IMF Shock'

Global PEFs Like Newbridge and Carlyle Led During the IMF Crisis
Domestic PEFs Such as MBK and H&Q First Appeared in 2005
Overseas-Educated or Foreign Firm Veterans Still Dominate
Homegrown Firms Started With SME and Venture Restructuring Experience

Editor's NoteIt has been 20 years since private equity funds (PEFs) that buy and sell companies were first registered in Korea. The market, which was only 200 billion won in 2005, has rapidly grown to over 140 trillion won today. As seen in the Homeplus incident, PEFs now even affect the daily lives of ordinary people. We thoroughly investigate who the key figures controlling the domestic PEF industry are.

Under Korean law, private equity funds (PEFs) officially emerged in 2005. At the end of 2004, the Indirect Investment Asset Management Business Act was amended, allowing the establishment of PEFs that could freely buy and sell companies by receiving capital from institutional investors. Consequently, MBK Partners, Bogo Fund (now VIG Partners), and H&Q Korea appeared one after another in 2005. However, Stick Investment and IMM Investment claim their founding year as 1999, not 2005.

2005 and 1999. Following this secret leads us to the main lineage of Korean PEF networks.

MBA Graduates and Foreign Financial/Consulting Firms Dominate

The 1997 Asian Financial Crisis was a moment when the Korean financial industry 'forcibly' gained global experience. The term private equity fund (PEF) became widely known during the large-scale restructuring led by Newbridge Capital (a global PEF subsidiary of TPG) acquiring Cheil Bank and Lone Star acquiring Korea Exchange Bank as part of overcoming the crisis. At this time, individuals with experience in foreign firms dominated the first generation of the domestic PEF industry.

A representative figure is Chairman Kim Byung-joo of MBK Partners, whose name became known to the public recently due to the Homeplus incident (MBK stands for Michael Byung-joo Kim). Chairman Kim graduated with a bachelor's degree in English literature from Harvard College and an MBA from Harvard University. He is also the son-in-law of the late Park Tae-joon, chairman of POSCO. He worked at U.S. securities firms Goldman Sachs and Salomon Smith Barney. After becoming the head of global PEF Carlyle Korea in 1999, he led the acquisition and sale of Hanmi Bank, earning significant profits. Based on this success, he founded MBK Partners named after himself. MBK Partners' Vice Chairmen Yoon Jong-ha and Boo Jae-hoon also share the common background of completing bachelor's and master's degrees in the U.S. and working at Carlyle.

Lee Jong-won, CEO of the first-generation H&Q Korea, holds a bachelor's degree in economics from the University of Toronto and a master's degree in financial accounting from the London School of Economics. He participated when the global PEF H&Q Asia Pacific opened its Korea office in 1998. In 2005, he became independent with CEOs Kim Hoo-jung and Lim Yoo-chul to establish H&Q Korea, which is why H&Q Korea states 1998 as its founding year on its website.

Han Sang-won, CEO of Han & Company, which is considered a 1.5 generation PEF but has grown to rival MBK Partners, graduated from Yale University with a degree in economics and holds an MBA from Harvard University. He is also the son-in-law of Bang Sang-hoon, chairman of the Chosun Ilbo. After working at Morgan Stanley PE and others, he founded Han & Company in 2010.

Most of the second-generation PEF networks graduated from SKY universities (Seoul National University, Korea University, Yonsei University) and U.S. MBA programs and have experience working at foreign firms.

Lee Cheol-min and Shin Chang-hoon, CEOs of VIG Partners, graduated from Seoul National University and worked at Boston Consulting Group before joining Bogo Fund, the predecessor of VIG, at its founding in 2005.

Kim Soo-min, CEO of UCK Partners, graduated from Seoul National University with a degree in business administration and earned an MBA from Columbia University. He worked at Bain & Company and Goldman Sachs.

Lee Sang-ho, CEO of Glenwood Private Equity, graduated from Korea University and Columbia University MBA, and has experience working in Samsung Electronics' finance team and at Goldman Sachs' New York and Hong Kong branches. He is the second son of former Samsung Electronics Vice Chairman Lee Hak-soo and the younger brother of Lee Sang-hoon, TPG Korea's representative.

Praxis Capital co-founders Lee Kwan-hoon, Yoon Joon-sik, and Ramin Sang all completed their undergraduate studies in Korea before studying in the U.S. They bonded while working at Bain & Company and founded Praxis in 2013.

Domestic PEFs Nurtured by IMF Restructuring Experience

Although initially weak, the so-called 'native' large PEF founders, who have now grown to rival MBK Partners and Han & Company, have experience related to restructuring small and medium enterprises immediately after the Asian Financial Crisis.

In the case of Stick Investment, Chairman Do Yong-hwan, who graduated with bachelor's and master's degrees from Korea University and gained experience at Jeil Securities and Shinhan Life Insurance, founded Stick in 1996. When the financial crisis hit the following year, he survived by managing and providing financial consulting to small technology companies. In 1999, Stick IT Investment, the predecessor of Stick Investment, was established with investments from SK Telecom and others. Even now, as the elder statesman of native PEFs, Stick Investment cites 1999 as its founding year.

IMM Investment traces its origins to IMM Startup Investment, founded in 1999 by current CEO Jang Dong-woo along with former Goldman Sachs Asset Management CEO Lee Ji-hyung and others. In 2001, current IMM Private Equity CEO Song In-jun, along with Jang Dong-woo and current IMM Investment CEO Ji Sung-bae, established IMM & Partners, a corporate restructuring specialist company (CRC). In 2004, IMM Startup Investment and IMM & Partners merged, and in 2006, IMM Private Equity was spun off, completing the current IMM Private Equity and IMM Investment structure. CEOs Song In-jun and Ji Sung-bae are alumni of Seoul National University’s business administration bachelor's and master's programs and worked as certified public accountants at major accounting firms. CEO Song and CEO Jang are brothers-in-law. Ji said, "The diverse experiences we had to endure during the difficult times after the financial crisis became a great asset."

JKL Partners was established in 2001 as a CRC by co-CEOs Jung Jang-geun (J), Kang Min-gyun (K), and Lee Eun-sang (L). All three graduated from Seoul National University and Korea University with degrees in business and economics, obtained CPA licenses, and worked at Samjong Accounting Corporation. Later, JKL Partners transitioned to a PEF in 2008 and gained recognition as a PEF by acquiring Pan Ocean together with Harim Group, with whom they had ties since their CRC days. CEO Kang Min-gyun said, "Our CRC experience was very useful in evaluating companies during acquisitions and in allocating human and material resources after acquisition to increase value."