The Financial Supervisory Service resumed inspections of domestic private equity fund (PEF) managers. Following MBK Partners and Stonebridge Capital last year, it put VIG Partners on the list as the first on-site inspection target this year.
According to the investment banking (IB) industry on the 20th, the Financial Supervisory Service (FSS) dispatched a researcher to VIG Partners' headquarters in Jung District, Seoul last week to begin an on-site inspection. The inspection is scheduled to continue this week following last week.
The FSS's on-site inspection of VIG Partners is part of strengthened examinations and supervision of PEF managers, and it is reportedly reviewing VIG Partners' overall investment management processes.
Earlier, in May last year, the FSS signaled an expansion of supervision of domestic PEF managers. At the time, MBK Partners' Homeplus Co. filing for corporate rehabilitation brought moral hazard from poor management to the fore as a social issue.
Since then, the FSS expanded its inspections beyond MBK Partners to Stonebridge Capital, among others. VIG Partners is understood to be the first on-site inspection of a PEF manager this year.
In particular, FSS Governor Lee Chan-jin held a meeting of institution-only PEF CEOs early this year and said, "public trust in the overall PEF industry has been severely damaged," adding that "public intervention is unavoidable."
Some observers say the FSS could further expand on-site inspections of PEF managers this year, starting with VIG Partners. This is because it also unveiled a plan last year to expand to five firms within the year.
A person in the IB industry said, "It can be seen that the FSS has resumed ad hoc inspections of PEF managers," adding, "Starting with VIG Partners, there is a high possibility of expanding inspections to mid-sized PEF managers."