S. Korea seeks to ease regulation on private equity funds

SEOUL, Oct. 30 (Yonhap) -- The government and the ruling Democratic Party (DP) will unveil measures to ease regulations on private equity funds (PEFs) in a bid to boost the capital market, party officials said Tuesday.

Government and DP officials plan to hold talks to discuss ways to revitalize lackluster investment in the capital market Thursday, according to party officials.

Measures under review likely include easing the threshold in creating PEFs by expanding the number of permissible investors.

Currently, domestic PEFs are restricted to having 49 or fewer investors, limiting their capability to attract investment funds. If adopted, the number is expected to increase to up to 100.

"We are preparing measures to lure the funds excessively invested in the property market into the capital market," a DP official said. "A set of deregulation measures will be targeted at revitalizing the capital market."

In September, the government announced that it will impose tougher taxes on the owners of high-value houses and multiple homes, and increase the housing supply as home prices posted the fastest growth in a decade.

On the back of a long streak of low rates, funds heavily made their way into the real estate market, pushing up home prices.

Other measures to rev up the capital market include easing regulation on the stake ownership of PEFs, officials added.

Currently, local PEFs are required to buy more than 10 percent of a big company if they seek to engage in the firm's management. Hedge funds or investment-focused PEFs are restricted to exercising their voting right only if their stakes exceed 10 percent.

The rule is viewed as discriminatory against domestic PFEs as foreign rivals are able to engage in the management of big companies with smaller stakes.

As a minority shareholder, Elliott, a U.S. activist hedge fund, opposed a merger of two units of Samsung Group. It is now calling for Hyundai Motor Group to adopt a holding company structure.

The Financial Services Commission (FSC), the financial regulator, said last month that it will seek to relax regulations on domestic PEFs to provide them with "level playing fields" versus foreign rivals.

Authorities will also permit the establishment of business development companies (BDCs), entities focusing on investing in non-listed firms or companies listed on South Korea's tertiary bourse, the KONEX.

Source: Yonhap News Agency

S. Korea seeks to ease regulation on private equity funds

SEOUL, Oct. 30 (Yonhap) -- The government and the ruling Democratic Party (DP) will unveil measures to ease regulations on private equity funds (PEFs) in a bid to boost the capital market, party officials said Tuesday.

Government and DP officials plan to hold talks to discuss ways to revitalize lackluster investment in the capital market Thursday, according to party officials.

Measures under review likely include easing the threshold in creating PEFs by expanding the number of permissible investors.

Currently, domestic PEFs are restricted to having 49 or fewer investors, limiting their capability to attract investment funds. If adopted, the number is expected to increase to up to 100.

"We are preparing measures to lure the funds excessively invested in the property market into the capital market," a DP official said. "A set of deregulation measures will be targeted at revitalizing the capital market."

In September, the government announced that it will impose tougher taxes on the owners of high-value houses and multiple homes, and increase the housing supply as home prices posted the fastest growth in a decade.

On the back of a long streak of low rates, funds heavily made their way into the real estate market, pushing up home prices.

Other measures to rev up the capital market include easing regulation on the stake ownership of PEFs, officials added.

Currently, local PEFs are required to buy more than 10 percent of a big company if they seek to engage in the firm's management. Hedge funds or investment-focused PEFs are restricted to exercising their voting right only if their stakes exceed 10 percent.

The rule is viewed as discriminatory against domestic PFEs as foreign rivals are able to engage in the management of big companies with smaller stakes.

As a minority shareholder, Elliott, a U.S. activist hedge fund, opposed a merger of two units of Samsung Group. It is now calling for Hyundai Motor Group to adopt a holding company structure.

The Financial Services Commission (FSC), the financial regulator, said last month that it will seek to relax regulations on domestic PEFs to provide them with "level playing fields" versus foreign rivals.

Authorities will also permit the establishment of business development companies (BDCs), entities focusing on investing in non-listed firms or companies listed on South Korea's tertiary bourse, the KONEX.

Source: Yonhap News Agency