Seoul-based accounting firm Deloitte Anjin stressed the role of South Korean private equity houses in creating new value as uncertainties surface in the domestic merger and acquisition market.

“PEs are expected to take lead roles in Korea’s M&A market growth this year, because strategic investors are seeking to minimize risks when undergoing M&As to enhance their core competence,” said Kil Ki-wan, managing partner of Deloitte Anjin in charge of financial advisory services, at a forum June 25. “PEs should therefore be up for more activities to raise the value of their portfolio companies.”

He added that more M&A deals will come from collaboration between PEs and conglomerates, which are looking at M&As to consolidate their core strengths. 

Kil Ki-wan, managing partner of Deloitte Anjin in charge of financial advisory services, speaks at a forum held in Seoul on June 25.
Deloitte Anjin

His remarks come amid rising doubts about the upbeat M&A market forecast this year, which is being overshadowed by growing uncertainties in macroeconomic settings at home and abroad that often force large corporations to take a more conservative approach.

Despite some of the negative sentiment, PEs in Korea are riding high on the positive outlook. According to the Financial Supervisory Service, PEs through 2018 have invested a combined 13.9 trillion won ($12 billion) in some 410 companies, while their gains through exits came to a combined 9 trillion won. All figures were all-time highs.

Representatives of Korea’s top PE houses attended the Deloitte VCS Forum at the headquarters of the Federation of Korean Industries in Seoul. Woo Sung-soo, a partner at Deloitte Anjin, reviewed tax code revisions in Korea for financial investors. Lee Jung-hyun, a director at Deloitte Anjin and head of its value creation services team, discussed principles of value creation. Quantum Perspective Chief Executive Mountain Cho shared ways for PEs to manage portfolio costs.

Deloitte Anjin launched its value creation services team in April this year, and the team is dedicated to enhancing the mid- to long-term value of portfolio companies owned by PE houses.

By Son Ji-hyoung (consnow@heraldcorp.com)