This article was displayed on the ChosunBiz MoneyMove (MM) site at 3:36 p.m. on Jan. 13, 2026.
Conflicts between private equity fund (PEF) managers and large conglomerate affiliates are becoming more frequent as listings run into trouble. Investments are typically raised on the premise of going public, but whenever a listing becomes difficult, both sides offer interpretations of the contract terms that favor themselves. With frequent disputes, some expect it will become harder for conglomerate affiliates to attract investment.
According to the investment banking (IB) industry on the 13th, LS Cable & System filed a countersuit late last year over a lawsuit by PEF manager Keystone Partners seeking to enforce a put option (sell-back right) on LS EV Korea (LSEVK). LSEVK is an electric-vehicle parts subsidiary established in 2017 by LS Cable & System that produces high-voltage connectors and battery components.
Keystone Partners has continued investing since 2020 and holds 16% equity in LSEVK. The investment contract included an obligation to cooperate on a listing, a put option (15% IRR) exercisable on a limited basis if the listing falls through, and a right of first negotiation with LS Cable & System (4% IRR) in response to Keystone Partners' tag-along sale right.
LSEVK underwent a preliminary review in September last year with the goal of listing on KOSDAQ. The attempt effectively failed, and LS Cable & System says the application was rejected because Keystone Partners failed to comply with a lockup commitment during the review.
Keystone Partners, however, claims LS Cable & System is responsible for the failed listing and filed a lawsuit to enforce a put option worth 75.9 billion won. In December last year, LS Cable & System exercised its right of first negotiation; Keystone Partners recovered 48.9 billion won by applying a 4% internal rate of return (IRR) to the 40 billion won principal.
◇ SK ecoplant pushes ahead with listing despite accounting violations
Discord is also expected between SK ecoplant and private equity funds. SK ecoplant is considering submitting a preliminary listing application to the Korea Exchange (KRX) this month for the main board. Although it received a gross negligence-level measure in an audit review last October for violating accounting rules at its U.S. subsidiary, it is proceeding with the listing nonetheless.
Some SK ecoplant investors suspect the company knows a listing will be difficult yet is exploiting loopholes in the shareholder agreement to merely satisfy the formalities of its listing obligations. If the company willfully neglects its listing obligations, investors can hold it accountable, but if a listing falls through despite best efforts, it is difficult to impose separate penalties.
SK ecoplant raised a pre-IPO investment of 1 trillion won in 2022. PEF managers E&F Private Equity, Q Capital Partners, Premier Partners, and KY PE invested 600 billion won in convertible preferred shares (CPS). Glenwood Credit and Korea Investment & Securities Co. executed 400 billion won in redeemable convertible preferred shares (RCPS).
The contract stipulates that if the company fails to list by July this year, it must repay the investment with interest or raise the guaranteed rate of return as a penalty. The guaranteed return or dividend rate, which had been in the 5% range annually, would rise to the low-10% range. Because the revised rate would be applied retroactively to the 2022 investment date, the amount the company would have to repay would jump sharply if the penalty is enforced.
The Korea Exchange listing preliminary review guidelines specify transparency in accounting treatment as one of the qualitative review requirements. If a company was fined in an accounting review of its audit reports for the past three fiscal years, that becomes grounds for denying a listing. Previously, SK ecoplant was found to have overstated sales at a U.S. subsidiary by 150.6 billion won in 2022 and 464.7 billion won in 2023, and it received measures including a 5.41 billion won penalty surcharge.
An SK ecoplant official said, "We have not finalized a listing plan yet and are continuing discussions with financial investors (FIs)," and added, "Depending on the talks, either we will proceed with the listing or the listing deadline will be extended."
As conflicts persist, some expect it will become more difficult for conglomerate affiliates to raise capital. An IB industry official said, "In the end, from the investor's standpoint, to avoid losses they can only tighten the contract terms," and noted, "The practice of investing based on conglomerate reputations is gradually fading."