Private Equity - South Korea

South Korea

The deal value in the Private Equity market is projected to reach €12.82bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2025) of 6.94% resulting in a projected total amount of €13.71bn by 2025.
The average size per deal in the Private Equity market amounts to €154.40m in 2024.
From a global comparison perspective it is shown that the highest deal value is reached in the United States (€550,900.00m in 2024).
In the Private Equity market, the number of deals is expected to amount to 86.22 by 2025.

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Analyst Opinion

The Private Equity market in South Korea has seen negligible growth recently, influenced by factors such as uncertain economic conditions, regulatory challenges, and a lack of investment diversification, which have hindered investor confidence and overall market expansion.

Customer preferences: In South Korea, investors are increasingly gravitating towards sustainable and socially responsible investment opportunities, driven by a growing awareness of environmental and social governance (ESG) factors. This cultural shift, particularly among younger demographics, reflects a preference for portfolios that align with ethical values. Additionally, the rise in tech-savvy consumers has led to a heightened interest in sectors such as fintech and digital health, influencing private equity firms to adapt their strategies towards innovative businesses that cater to evolving lifestyle preferences and societal needs.

Trends in the market: In South Korea, the private equity market is experiencing a notable shift towards investments in sustainable and impact-driven enterprises, aligning with a global emphasis on environmental, social, and governance (ESG) considerations. This trend is particularly pronounced among millennials and Gen Z investors, who prioritize ethical investment choices. As a result, private equity firms are increasingly focusing on sectors like renewable energy, sustainable agriculture, and green technology. This strategic pivot not only meets evolving consumer expectations but also positions firms to capitalize on emerging regulatory frameworks aimed at promoting sustainability, ultimately enhancing long-term value for stakeholders.

Local special circumstances: In South Korea, the private equity market is uniquely influenced by the country's rapid technological advancements and a strong cultural emphasis on community welfare. The government's supportive policies for startups encourage investment in innovative sectors, particularly in sustainable technologies. Additionally, South Koreans’ heightened awareness of environmental issues fosters a demand for ethical investment, compelling private equity firms to prioritize green projects. This local context not only accelerates the shift towards sustainable investments but also positions South Korea as a leader in responsible capital allocation within the global private equity landscape.

Underlying macroeconomic factors: The private equity market in South Korea is significantly influenced by macroeconomic factors, particularly central bank policy and interest rates. The Bank of Korea's monetary policy, including interest rate adjustments, directly affects the cost of capital for private equity firms. A low-interest-rate environment encourages borrowing and leverages, facilitating increased investments in growth-oriented ventures. Conversely, rising interest rates can dampen investment activity, as higher costs reduce the attractiveness of leveraged buyouts. Additionally, global economic trends, such as trade dynamics and foreign direct investment inflows, further shape market performance by impacting the liquidity and risk appetite of investors in South Korea's evolving private equity landscape.

Methodology

Data coverage:

The figures are based on deal value, number of deals, the average size of each deal, and assets under management within the Private Equity market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, and publicly available databases. In addition, we use relevant key market indicators and data from country-specific associations, such as: GDP, total investment (% of GDP), household wealth (per Adult), high income (% of population), and number of high-net-worth individuals (HNWI). This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are total investment (% of GDP), household wealth (per Adult), number of high-income persons, and number of high-net-worth individuals (HNWI).

Additional notes:

The market is updated twice a year in case market dynamics change.