Korean private equity inroads to Southeast Asia to pick up from IPEF joining

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South Korean private equity fund (PEF) operators that have been actively diversifying their investment target industries and markets raise hopes for bigger opportunities through the launch U.S.-led Indo-Pacific Economic Framework (IPEF) has officially kicked off.

South Korea joined the 13 inaugural members of the new regional trade order based on four pillars – supply chain resilience, clean energy, decarbonization, and infrastructure and taxation -largely to contain Chinese influence over the region.

Korean PEFs that have actively invested in Southeast Asian countries can benefit from the anticipated increase in U.S.-led investments in the economies that represent 40 percent of the global gross domestic product. The members apart from Korea and U.S. are Australia, Brunei, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore and Thailand.

STIC Investment commands big portfolio IPEF countries in the Southeast Asia region. Since establishing its first Southeast Asian office in Ho Chi Minh in 2008, STIC has steadily increased the number of its offices across the region.

In 2020, it invested around $200 million in Singapore’s ride-sharing and delivery app Grab, Southeast Asia’s version of Uber. STIC also invested $10 million in India’s delivery service Dunzo and the nation’s largest chain of hospitals, Sahyadri. Together with Naver Corp., STIC invested $33 million in Indonesia’s online grocery platform HappyFresh. Its Seoul headquarters has been also actively leading recent investments in the region.

IMM Investment is expanding presence in the IPEF region in partnership with Korean conglomerates. It created a COPA fund, a private equity fund for overseas M&As, worth $400 million with Daewoo E&C in March to jointly invest in promising areas such as the cold chain business in Vietnam. IMM Investment currently plans to launch a $500 million worth COPA fund with SK ecoplant in the first half of this year with an aim to invest in Tes, Singapore’s leading electronic waste (e-waste) disposal and recycling company.

Affirma Capital, with private equity operations in six different regions including Korea, India, Southeast Asia, the Middle East, China, and Africa, has led investment in various small financial companies in India. It also recently invested 90 billion won ($71.37 million) in Beam Mobility, becoming the second-largest shareholder.

Korean PEFs’ have been actively seeking to diversify their investment targets and markets.

In 2018, SJL Partners partnered with KCC and Wonik Group to invest $3 billion in U.S.-based silicone maker Momentive Performance Materials. ACE Equity Partners, KAMUR Partners, and Cerritos Holdings formed a consortium last year to buy a 20 percent stake in Australian Strategic Materials (ASM), an emerging “mine to metals” producer of critical metals.

With the official launch of the IPEF, Korean PEFs with history of investment in IPEF countries are expected to accelerate their inroads into those countries as part of efforts to reduce reliance on China where regulatory risk is high while the continued U.S.-China trade war remains as a threat to their business.

IPEF’s initial partners include Australia, Brunei, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam that together represent 40 percent of world GDP, according to the statement issued by the White House.

By Park Chang-young and Susan Lee

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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