[PE Now] Big Deals Slow Down... PEs Focusing on the Mid-Market

Rising Burden of Public Tender Offers for Listed Firms... Greater Risks Ahead

Major PEFs Shift to Caution Mode

Intensifying Competition for Small and Mid-Sized Deals

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While trillion-won “big deals” have slowed down in the domestic private equity fund (PEF) market, mid-market transactions valued at around 500 billion won have become relatively more active. Although the amount of dry powder—capital waiting to be invested—remains high, analysts say that growing uncertainty surrounding large-scale deals is prompting asset managers to take a more cautious approach.

According to the investment banking (IB) industry on March 30, most recent mergers and acquisitions (M&A) that have been completed or are underway fall under the “mid-market” category, with deal values below 1 trillion won. IMM PE, a leading domestic PEF manager regarded as a “big house,” recently acquired CG Bio for approximately 600 billion won (acquiring a 51% stake). Likewise, SK Eterynix, which is being acquired by major global asset manager KKR, is valued at 250 billion won (for a 31% stake). Even for the sale of MNC Solution, which is being discussed at just over 1 trillion won, major domestic conglomerates are showing interest, but PEF managers remain largely cautious. Among domestic PEs, the only trillion-won transaction last year was Glenwood Private Equity’s acquisition of NanoH2O (formerly LG Chem’s water solutions division).

Uncertainty Over Exits Rises Amid Policy Shifts

The main factor behind this trend is a changing exit environment. Amendments to the Commercial Act have effectively restricted dual listings, increasing the burden of additional costs and procedures—such as tender offers—when acquiring listed companies. Previously, many Korean firms were structured to allow control with a small equity stake, enabling PEFs to acquire companies at prices well below their actual market capitalization simply by paying a modest management premium. Now that this approach has been largely blocked, there is a growing tendency in the industry to avoid acquiring listed companies.

Policy risks at the individual company level are also increasing exit uncertainty. A prime example is Affinity Equity Partners’ attempted acquisition of Lotte Rental. The Fair Trade Commission denied approval for the business combination, raising concerns that Affinity EP, which already owns SK Rent-a-Car, would gain dominance over the entire market if it acquired Lotte Rental. The excessive management premium assigned to Lotte Group was also cited as a problem. As the deal ran into difficulties, Lotte Group experienced setbacks in urgently needed capital procurement, and Min Byungcheol, CEO of Affinity EP, left the company. This case illustrates the heightened risks associated with large-scale deals amid the changing policy environment.

Heightened Social Scrutiny Spurs Caution

Social scrutiny of major private equity funds capable of executing “big deals” has also intensified compared to the past. After controversy erupted during MBK Partners’ investment and exit from Homeplus, regulatory authorities moved swiftly to tighten oversight. This has encouraged large PEF managers to adopt a wait-and-see approach rather than aggressive investing. “Right now, risk management is as important as generating returns,” said an IB industry official, adding, “The bigger the firm, the stronger the sentiment not to attract unnecessary attention.”

Similar changes are being observed in the acquisition finance market. While financial institutions are increasing outreach to asset managers to provide alternative investment funding, PEFs are maintaining a conservative stance due to high leverage burdens and exit uncertainties. As a result, instead of large-scale leveraged buyouts as in the past, the focus has shifted to mid- and small-sized deals or structured investments, which involve less risk.

“Recently, acquisition finance providers have been reaching out to PEFs to promote capital raising, but asset managers are proceeding very cautiously,” said a partner at a mid-sized PEF. “Those providing acquisition finance are also disappointed by the decrease in highly leveraged transactions.”

Plenty of Investment Capacity... Bright Outlook for Mid-Market Deals

Industry analysts believe that, with ample investment capacity still available, the mid-market investment trend is likely to continue for the foreseeable future. Although the size of new funds has increased, investment execution has been delayed, making even large PEFs more likely to actively consider mid-market opportunities.

According to Samjong KPMG’s “2026 Asia-Pacific PE Investment Trends and Opportunities” report, the proportion of mid-market (globally defined as $15 million to $500 million) deals rose from 32% in the second half of 2025 to 45% in the first half of last year. Asia-Pacific fundraising totaled $95.4 billion (about 144 trillion won) in the first half of last year, the second largest after 2019 for the same period. In contrast, investment volume was $64.3 billion, down 28% from the previous year.

Additionally, as 35 trillion won out of the 150 trillion won National Growth Fund allocated to alternative investments must be deployed domestically, a surge in the search for investment targets is expected. “Limited partners (LPs) are showing a preference for secondary deals—transactions between asset managers—which provide relatively easier exits and help with risk management,” said a PE industry source, adding, “Competition to identify quality mid- and small-sized assets is expected to intensify.”

This content was produced with the assistance of AI translation services.