[PE Now] Global Capital Behind 80% of Major Deals, Eyes Carve-Outs and Business Succession

Lee & Ko: "Global PEFs Active in M&A Acquisitions and Divestitures"
Global PEFs Also Behind Major Deals Worth More Than 1 Trillion Won
FT: "South Korea Is Asia's Next Market to Watch After Japan"

Overseas private equity funds (PEFs) were behind most of this year's major deals. Foreign PEFs appear to have focused on trillion-won deals involving the sale of business units through carve-outs prompted by major companies' restructuring and issues related to business succession. Some analysts say global PEFs are filling the void left by domestic Korean private equity funds amid increased regulation.

In a recent report, Lee & Ko said, "By some estimates, foreign capital accounted for about 80% of domestic private equity buyout deals worth at least 500 billion won between January and July this year." The firm added, "Last year, there were 690 M&A deals worth a combined 89 trillion won, the highest annual total since 2021, while the number of deals worth at least 1 trillion won rose from eight in 2024 to 18." It also noted that "global private equity funds were particularly active in acquisitions and divestitures in the second half of 2025 and the first half of 2026."

The Financial Times (FT) also reported on October 19 that global private equity firms view South Korea as the next country to watch in Asia after Japan. Citing Deloitte data, the FT said, "Japan accounted for more than a quarter of private equity investment in Asia, while South Korea accounted for 11%." It added, "Although Japan remains a leading destination for investment in Asia, investors are looking beyond its saturated market for other opportunities."

Global PEFs were behind this year's major deals worth more than 1 trillion won. Their activity was particularly notable in carve-out deals involving major companies. In August, KKR signed an investment agreement under which it will ultimately own a 29% stake in SK Horizon, a newly established company spun off from SK Broadband to take over its data center and submarine cable businesses. Combined with the investment by the IMM consortium, which committed funds around the same time, the deal involved a total investment of 3.08 trillion won. In August, Texas Pacific Group (TPG) also signed an agreement to acquire Lotte Rental, South Korea's largest rental car company, for 1.3 trillion won.

Business succession issues are another reason global PEFs are turning their attention to South Korea. In June, global private equity firm The Carlyle Group signed a stock purchase agreement (SPA) with the family of the late founder of water purifier maker ChungHo Nais to acquire a controlling stake in the company, completing the deal in August. The transaction was reportedly valued in the low 1 trillion won range.

"More founders are considering selling their businesses because they want to pass the company on to the next generation, while their children and grandchildren are reluctant to take over," an investment banking industry source said. "As a result, inquiries from global PEFs are also increasing." The FT likewise said, "Business succession is one of the biggest catalysts for deals in South Korea," adding that "like Japan, South Korea is an aging society, and the baby boomers who founded small and medium-sized businesses are nearing retirement age."

Some analysts say global PEFs are filling the gap created by regulations on domestic private equity funds. After MBK Partners triggered the Homeplus crisis, more than 10 bills aimed at strengthening oversight of domestic private equity funds were introduced in the National Assembly. The FT reported, "Global PEFs are filling the void left by South Korean companies," adding that "according to Dealogic, fundraising by domestic PEFs fell to $2.6 billion this year from $14.4 billion last year." Lee & Ko also said in its report, "Global PEFs have been highly active, as public and regulatory scrutiny of domestic general partners has intensified."

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