Key Takeaways
- • IMM Private Equity acquired a 65% management stake in Ewha Diamond Industrial, Korea's No. 1 diamond tool maker, for 400 billion won, with the deal contracted in August according to investment bank industry sources.
- • IMM PE cut acquisition loans to roughly 25% of total funding, filling the balance with CoinBest co-investments from LPs and blind fund capital, reflecting a shift away from leveraged buyouts.
- • Acquisition financing costs reached as high as 8% annually, close to the 8% base return typically promised to LPs, eroding the leverage effect that LBOs rely on.
- • Competition in the acquisition finance market is intensifying as PEF debt usage falls, M&A activity has slowed, and banks and securities firms compete for a smaller pool of deals.
Summary
IMM Private Equity (PE), Korea's leading private equity fund operator, recently acquired a 65% management stake in Ewha Diamond Industrial Co., Korea's No. 1 diamond tool maker, for 400 billion won, according to investment bank industry sources cited on November 3. The transaction was contracted in August and was structured differently from the traditional leveraged buyout model. Acquisition loans were reduced to about 25% of total funding, with the remainder filled by joint investments from LPs through the CoinBest mechanism alongside the Rose Gold No. 5 blind fund, which was formed with 2 trillion won in 2024.
A blind fund collects LP capital before specific investments are identified, while CoinBest allows LPs to review a particular deal directly and invest additional capital separately. The shift reflects rising interest burdens after recent rate increases. Acquisition financing rates reached up to 8% annually, roughly equal to the base return of about 8% typically promised to LPs, which has largely eliminated the leverage advantage of debt-funded acquisitions.
Other deals show the same pattern. Stone Bridge Capital used the CoinBest structure to acquire semiconductor equipment maker Foyce last month, and Coston Asia acquired power device company Woojin Electronics in September using acquisition financing for only 10% of the purchase price.
As PEFs reduce borrowing, competition for acquisition finance has intensified. New M&A activity has slowed, and refinancing demand has weakened because existing loans at 5-6% would have to be reset to higher rates. Banks and securities firms are competing for a smaller pool, and comprehensive investment account funds, which must satisfy mandatory corporate financial ratios, have entered the market. Hana Bank and Hana Securities recently arranged roughly 470 billion won of acquisition financing for Bain Capital's purchase of Central Terminal Korea (CTK), a transaction of about 600 billion won with an 80% loan-to-value ratio. Because of the high LTV, the loans cannot readily be sold to other financial institutions, and a 20% decline in corporate value would put lender principal at risk.
A blind fund collects LP capital before specific investments are identified, while CoinBest allows LPs to review a particular deal directly and invest additional capital separately. The shift reflects rising interest burdens after recent rate increases. Acquisition financing rates reached up to 8% annually, roughly equal to the base return of about 8% typically promised to LPs, which has largely eliminated the leverage advantage of debt-funded acquisitions.
Other deals show the same pattern. Stone Bridge Capital used the CoinBest structure to acquire semiconductor equipment maker Foyce last month, and Coston Asia acquired power device company Woojin Electronics in September using acquisition financing for only 10% of the purchase price.
As PEFs reduce borrowing, competition for acquisition finance has intensified. New M&A activity has slowed, and refinancing demand has weakened because existing loans at 5-6% would have to be reset to higher rates. Banks and securities firms are competing for a smaller pool, and comprehensive investment account funds, which must satisfy mandatory corporate financial ratios, have entered the market. Hana Bank and Hana Securities recently arranged roughly 470 billion won of acquisition financing for Bain Capital's purchase of Central Terminal Korea (CTK), a transaction of about 600 billion won with an 80% loan-to-value ratio. Because of the high LTV, the loans cannot readily be sold to other financial institutions, and a 20% decline in corporate value would put lender principal at risk.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.