[PE Now] Global PE Firms Make Strides While Korean PEs Trade Portfolios... Rising Concerns Over Regulatory Discrimination

Global PE Investment Concentrated in AI Infrastructure

Domestic PEs Contract as Secondary Buyouts Increase

Regulatory Tightening Accelerates Disparities... a Level Playing Field No More

The global private equity (PE) market is regaining momentum, particularly focused on artificial intelligence (AI) and energy infrastructure. While geopolitical risks and the pressure of high interest rates remain present, global PE firms are channeling capital into large-scale deals by selectively investing in assets with high growth potential and strong investment conviction. In contrast, the mood in Korea's domestic PE market is different. Instead of new investments, there has been a marked increase in so-called “secondary buyouts”—existing portfolio stakes being transferred from one PE to another.

Contraction of Korean PE... Contrasting with Global Market Trends

According to the recent report "Global PE Investment Trends and Outlook for the Second Half of 2026" published by Samjong KPMG, global PE investments in the first half of this year totaled 9,294 deals and USD 1 trillion (approximately KRW 1,381.1 trillion). Although this is a slower pace compared to last year’s total of USD 2.3 trillion across 21,646 deals, capital inflows themselves remained robust. Notably, investment was highly concentrated in high-value-added assets, such as energy and AI infrastructure. It is interpreted that trends such as the proliferation of AI, increasing demand for data centers and power, and a global push for energy security have drawn PE capital to these sectors.

On the other hand, the Korean market has shown signs of relative contraction. Samjong KPMG tallied Korean PE investment for the first half of this year at USD 5.6 billion across 69 deals. The company diagnosed that a combination of factors—including energy risks stemming from disruptions in Middle Eastern shipping through the Strait of Hormuz, rising procurement interest rates, stagnation in the domestic mergers and acquisitions (M&A) market, and the National Pension Service’s halt to new commitments to local PEs—have all contributed to a slowdown in investment activities.

However, it is not the case that the flow of capital into the domestic market has completely dried up. Due to the prolonged high exchange rate environment, businesses are increasingly reviewing the divestiture of non-core assets, and there is analysis that investment in high-quality domestic assets has remained brisk, especially among global PEs with ample capital power. While Korean PEs have adopted a more conservative stance, global PEs have selectively been acquiring attractive domestic assets.

This trend is closely tied to a sense of crisis currently felt in the domestic PE industry. The cost of acquisition financing has increased, and the IPO market and the sales market for strategic investors (SIs) are far from their previous highs. Establishing new blind funds has also become more challenging than in the past. Limited partners (LPs) are demanding stronger track records of realizations and cash distributions, yet viable exit channels remain limited. As a result, in recent times, secondary buyouts—where a PE-owned company is sold to another PE—are rising as a key exit avenue in Korea’s M&A market.

Cleantopia, U Moment, and Manjeon Foods: PE-to-PE Trades Increase

A representative example is Cleantopia. JKL Partners acquired 100% of Cleantopia’s shares in 2021 for approximately KRW 190 billion, expanding the business from its original B2C (business-to-consumer) focus into the B2B (business-to-business) arena such as hotel laundry, and increased the number of franchise stores to about 3,100. Last year, both revenue and EBITDA improved significantly, to KRW 279.8 billion and KRW 36.5 billion, respectively, compared to the time of acquisition. Early this year, STIC Investments purchased Cleantopia’s entire stake for KRW 630 billion, seeing further growth potential based on the repetitive, consumer-centric revenue structure of a laundry franchise and nationwide logistics infrastructure. This is a classic secondary buyout: the original PE scaled up the business, while the new PE anticipated additional growth through platformization.

A similar example is U Moment, a wedding hall operator acquired by UCK Partners. In March this year, UCK acquired 100% of U Moment’s shares from Stonebridge Capital and Evergreen Private Equity for about KRW 200 billion. Notably, UCK had previously acquired Apelgamo from CJ Foodville and sold it to Evergreen PE in 2019. This recent deal thus represents a “reinvestment” in an asset class previously exited.

Manjeon Foods, known for its 'Manjeon Gim' (seaweed), also changed hands between PEs. In May, UCK acquired Manjeon Foods from Kamur PE for KRW 210 billion. Kamur PE initially invested about KRW 100 billion to acquire the company in 2021, and has now recouped about twice the principal in five years. With the growth of seaweed exports and K-food globally, this structure demonstrates how a consumer asset initially discovered by one PE is passed to another PE to pursue an even greater growth strategy.

Of course, PE-to-PE deals themselves do not necessarily indicate a market downturn. In mature PE markets, these are natural exit mechanisms. The concern lies in the underlying reasons for the increase in such deals in Korea: with SIs less active and the IPO market failing to meet expectations, the pool of potential buyers for PE assets is becoming increasingly restricted to other PEs. Within the industry, some interpret this as evidence of an “evolving exit market,” while others worry that it suggests assets are being circulated within a limited group of buyers.

Regulatory Disadvantage Claims... Narrowing Playing Field for Korean PEs

Regulatory burdens are also increasing. Following the Homeplus incident, criticism of private equity funds has gained momentum, prompting discussions about tighter regulations related to borrowings, fees, public disclosures, and internal controls. The financial authorities plan to move forward with revisions to the Capital Markets Act to strengthen PE regulation within the year, and after the Homeplus incident, multiple PE-related regulatory bills have been introduced in the National Assembly.

Industry insiders fear that such regulations could have a more direct impact on domestic management firms. While foreign PEs can leverage global fund structures and overseas subsidiaries with relative flexibility, domestic management companies (GPs) must directly bear the brunt of numerous regulations. While global PEs are expanding their freedom of movement by pouring large-scale capital into growth assets such as AI and energy infrastructure, domestic GPs must contend simultaneously with interest rates, LP demands, regulatory constraints, and public scrutiny even before making investments. Given the shrinking set of investment and exit options, many caution that it will be difficult for Korean PEs to compete on equal footing with their global peers.

Clearly, it is hard to deny the need to strengthen the accountability of private equity in the wake of the Homeplus incident. Concerns abound that excessive leverage, dividend distributions, or asset sales could undermine the sustainability of portfolio companies. However, industry insiders warn that if regulatory burdens are focused only on domestic management companies, the unintended consequence may be a weakening of domestic capital’s investment power, with the lead in high-quality assets shifting abroad. As one PE industry representative noted, “For Korean PEs to remain competitive with global players, broadening exit avenues, enhancing accountability, and boosting industry competitiveness must go hand in hand. If global PEs are actively expanding while domestic PEs are solely trading each other’s portfolios, the problem may not simply lie with individual deals, but with the overall market structure.”

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