FSC chief vows drastic deregulation on private equity funds

The Korean financial regulator’s chief said Friday he will push for drastic deregulation to ensure the freer and more independent operation of private equity funds in the local capital market.

“Every regulation on private equity will be reviewed from scratch. Through deregulation, private equity’s market entry, establishment and fund management will be upgraded to the level of advanced economies,” Financial Services Commission chairman Yim Jong-yong said at a conference on private equity in Seoul.

“We had already unveiled reform measures on private equity last year, but that is not enough,” he said.

In Korea, private equity funds are divided in two types -- “management participation type and professional investment type” -- and private equity fund managers are supposed to choose one of them. However, the distinction between the two does not exist in advanced economies, including the U.S., he said.

The FSC will allow private equities to choose whatever investment strategies they prefer, Yim said.

The Korean government hopes that private equity funds could help the streamlining and restructuring of poorly performing companies, he added.

Big figures in private equity funds, such as MBK Partners CEO Yoon Jong-ha and IMM Private Equity CEO I.J. Song participated on a panel at the conference, which was hosted by the Korea Capital Market Institute and the Korea PEF Association.

The private equity fund market has remarkably grown to reach 58 trillion won ($48.6 billion) over the past 10 years, but big private equity funds are still mostly dependent on foreign capital, which requires attention, said Lee Jae-woo, chairman of the Korea PEF Association.

By Kim Yoon-mi
(yoonmi@heraldcorp.com)