This article was posted on the ChosunBiz MoneyMove (MM) site at 5:19 p.m. Nov. 5, 2025.
South Korea's private equity fund (PEF) industry is suffering from conflicts over performance fees. PEF managers divide performance fees among fund operators after a fund is liquidated, and some who are dissatisfied with the allocation results are leaving their firms. Fund limited partners (LPs) are also watching the situation with concern.
According to the investment banking (IB) industry, some employees of PEF manager H&Q Korea have left the firm. Those who resigned reportedly left after H&Q Korea sold its investee Jobkorea. H&Q Korea saw at least seven times revenue compared with the principal from its Jobkorea investment.
UCK Partners also experienced turmoil for similar reasons. UCK said the departures were unrelated to performance fees, but those who left have said the company's explanation is not true. Hanwha Investment & Securities Private Equity (Hanwha Private Equity) and Shinhan Asset Management also saw some employees leave over investments in Daehan Shipbuilding and EcoPro, respectively.
Analysts say the reason performance fee disputes repeat is that allocation ratios are decided after a fund is liquidated. Abroad, it is common to set allocation ratios when a fund is formed, and the fund is formed only if operators agree to those ratios.
Because of this, allocation ratios inevitably depend heavily on the influence of domestic firm heads or partner-level executives. That naturally leads to dissatisfaction among midlevel operators.
One IB industry official said, "Senior people tend to think they contributed more through fundraising or deal sourcing, while junior people tend to think they did all the hard work," adding, "Because contribution is difficult to quantify, the problem keeps recurring."
Another IB industry official said, "Because you cannot know contribution to performance before fund operation, the current system took root under the pretext of paying carry (performance fees) based on contribution after operation, but the original purpose has been greatly distorted," and added, "There is a need to align with global standards."
LPs are also growing more alert. A domestic LP official said, "Operators should do their best for returns, but the structure makes them loyal to superiors who hold the power to allocate performance fees," adding, "Well-known private equity firms need healthy generational change, but it is worrisome that senior operators monopolize profits while aging."
An H&Q Korea official said, "In H&Q Korea's case, performance fee ratios are set before creating a fund," and "the resignation of some employees is also unrelated to performance fees."