Private equity investment fund was introduced in Korea in December 2004 and it has been implemented for over three years. It has been five years since the implementation of private equity M&A fund in 2003. However, private equity M&A fund is offered privately, not through public offering. Therefore, the Financial Services Commission, which in charge of registration and management of private equity investment fund, discloses the current situations of partners with unlimited liability and partners with limited liability, but does not publish individual companies which make the investment.
Previous studies on domestic private equity investment fund were conducted by Lim Byung-cheol in 2006 and 2007, Kim Ja-bong in 2006 and Kang Jeong-mi in 2007. Those studies focused on demand of institutional improvement including easing regulations to activate and increase investment size, the importance of the role of partners with unlimited liability, and methods to encourage the participation in private equity investment fund by institutional investors with large fund size such as national pension.
Meanwhile, regulations on private equity investment fund is being dramatically reduced as the Capital Market Consolidation Act took effect from February 4th, 2009 and the need to maintain systems for private equity M&A fund is growing. Considering that, M&A activities utilizing private equity investment fund are becoming an indispensable factor for changes in conglomerates and global management, and emerging as a key to global management. In particular, most of the current big M&A deals in the market such as Hyundai Engineering & Construction and Hynix are highly likely to go through M&A in the form of private equity fund.
Therefore, the purpose of this study is to examine the efficacy of private equity fund and the difference in response to M&A through private equity fund according to markets and funds. To do so, this study collected and analyzed data on investee companies of private equity investment fund and private equity M&A fund for the first time in Korea.
In the case of private equity investment fund, a cycle (step 1: raising fund, step 2: executing investment and improving corporate value, step 3: selling and allocating revenue) is being completed, as the system has been implemented for over three years. However, there has been no studies on analysis of actual proof for initial investor companies. Therefore, this study is quite different from previous ones in that it analyzed the actual performance of private equity investment fund based on M&A data through private equity investment fund and private equity M&A fund, although this study has a small number of examples and a limited range of data analysis.
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An Empirical Study on Short-Term Investment effect by Private Equity Fund
