Key Takeaways
- • The Korean Private Equity Management Council voted at its final regular general meeting on October 28 to renew its name as the "Korea Private Equity (PE) Federation" and convert from a council into an association, the first step toward becoming a legal organization.
- • Seven agenda items were approved by all 15 executive committee member companies, including the establishment of the federation, revisions to the articles of association, and maintaining the current leadership until the formal launch.
- • Chairman Park Byung-gun and Vice Chairman Hyun Seung-yoon will have their terms temporarily extended before the association officially begins operating in January of next year.
- • The transition is expected to create formal communication channels between the industry and regulators as the National Assembly weighs PEF regulatory bills following the Homeplus crisis, including proposals to reduce the LBO limit and strengthen internal controls.
- • Member companies have reportedly agreed to designate a "senior PE leader in his 60s" as the next chairman, with membership fees rising by AUM tier to fund a full-time organization.
Summary
The Korean Private Equity Management Council will rename itself the "Korea Private Equity (PE) Federation" and transition from a council to an association, according to the investment banking industry as reported by Maeil Business Newspaper on October 28. The council held its last regular general meeting as a council that day, where seven major agenda items were put to a vote. All 15 companies on the executive committee reportedly approved the agenda. Under the resolution, the existing council will be dissolved and a new association created, with member companies keeping their current voting tiers, which are based on operating assets under management (AUM). The association aims to begin full operations in January of next year and plans to apply to the Financial Services Commission for approval of its establishment.
Before the formal transition, Chairman Park Byung-gun and Vice Chairman Hyun Seung-yoon will have their terms temporarily extended. The report notes that Park has led the conversion effort since taking the helm earlier this year, and member companies reportedly view continuity in leadership as important for a smooth transition. The association has also raised membership fees by AUM size; the annual fee for management companies with AUM of 1 trillion won or more is around 50 million won. The funds are intended to cover labor costs for a full-time organization. The association added more than 10 new members this year, mostly startups and small and medium-sized firms.
The transition comes as the National Assembly and authorities consider PEF regulatory bills following the Homeplus crisis. Pending proposals reportedly include reducing the PEF LBO limit, strengthening internal controls, establishing qualification requirements for major shareholders of management companies, and cancelling registrations for firms that fail to meet requirements. The report characterizes PEFs as playing a positive role by acquiring non-core business units and assets from large companies and restructuring them. Once the association is operational, it is expected to serve as the official channel for industry input on these bills, and it has been preparing internal control guidelines to support that engagement. Before the January launch, the association is expected to begin selecting a new chairman, with member companies reportedly agreed to nominate a senior PE leader in his 60s.
Before the formal transition, Chairman Park Byung-gun and Vice Chairman Hyun Seung-yoon will have their terms temporarily extended. The report notes that Park has led the conversion effort since taking the helm earlier this year, and member companies reportedly view continuity in leadership as important for a smooth transition. The association has also raised membership fees by AUM size; the annual fee for management companies with AUM of 1 trillion won or more is around 50 million won. The funds are intended to cover labor costs for a full-time organization. The association added more than 10 new members this year, mostly startups and small and medium-sized firms.
The transition comes as the National Assembly and authorities consider PEF regulatory bills following the Homeplus crisis. Pending proposals reportedly include reducing the PEF LBO limit, strengthening internal controls, establishing qualification requirements for major shareholders of management companies, and cancelling registrations for firms that fail to meet requirements. The report characterizes PEFs as playing a positive role by acquiring non-core business units and assets from large companies and restructuring them. Once the association is operational, it is expected to serve as the official channel for industry input on these bills, and it has been preparing internal control guidelines to support that engagement. Before the January launch, the association is expected to begin selecting a new chairman, with member companies reportedly agreed to nominate a senior PE leader in his 60s.
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