On Dec. 12, the Financial Supervisory Service gathered heads of major domestic private equity fund (PEF) management firms, but did not present any clear opinions or guidelines regarding the separation of finance and industry, leading to criticisms that it was a ‘meaningless meeting.’ With the growing influence of PEF management firms amid management disputes related to Korea Zinc, there are suggestions that the supervisory agency is signaling in some way.
On the same day at 10 a.m., the Financial Supervisory Service held a meeting with CEOs of 12 dedicated private equity fund (PEF) management firms at its headquarters conference room in Yeouido, Seoul. Attending the meeting were Ham Yong-il, deputy director of capital markets and accounting, and Seo Jae-wan, deputy director, along with CEOs from major PEF management firms including H&Q Korea, Han & Company, MBK Partners, and IMM Private Equity.
The Financial Supervisory Service assessed that it is meaningful to start discussions about the desirable appearance of PEFs from the perspective of the dominance of financial capital in industry, but voices from inside and outside the industry have expressed concerns about the supervisory authority appearing to pressure PEF management firms without any special legal basis.
A source in the PEF industry noted, “I understand that this meeting mainly focused on listening to the opinions of the PEF industry rather than the Financial Supervisory Service presenting its own views,” and added, “Since the industry is somewhat in a chaotic situation, the hurried gathering felt more like a show than anything new compared to previous messages.”
This meeting appears to be a follow-up to remarks made by Lee Bok-hyun, head of the Financial Supervisory Service, but he did not appear at the meeting. According to industry sources, the Financial Supervisory Service has reportedly changed its stance several times regarding whether Lee would attend.
Lee mentioned in a statement on Nov. 28 regarding the Korea Zinc case that, “In the past, authorities have been concerned about the dominance of industrial capital over financial capital, but now we must also consider the side effects of financial capital dominating industrial capital.” Depending on how one interprets it, this has been read as a message opposing MBK Partners' acquisition of Korea Zinc, leading to controversy.
During the meeting, among other topics, the acquisition of Korea Zinc by MBK Partners, the delisting of Osteem Implant, KCGI's acquisition of DB HiTek, and the management dispute over Hyundai Elevator were also mentioned. It is reported that both the authorities and the PEF industry agreed to pay more attention to protecting minority shareholders.
Ham noted, “There is a perspective that PEFs, managing large amounts of third-party funds in a regulatory blind spot, can significantly impact the market,” but added, “The overarching premise remains that PEFs must operate in accordance with market principles based on autonomy and creativity.”