Korean private-equity firm looks to invest regionally

Seoul-based venture-capital and private-equity firm STIC Investments (STIC) plans to expand its global PE investments from the current 20% to 60% over the next few years, says Kevin Lim, chief executive and managing partner.

STIC's PE fund currently focuses on domestic mid-cap companies, but its managers are looking at opportunities in China, Indonesia and Vietnam. The team's sectoral expertise is in IT, machinery, shipbuilding and automobiles. The firm also runs smaller strategies for special situations and small-cap M&A. It expects to have $2 billion in assets under management at the end of this year.

STIC was founded in 1996 as an asset-management company when Korea had no PE industry. It began running a portfolio of non-public equity from 1999 as a specialised investor in venture capital. It has invested in companies involved in telecommunications, IT networks, biotech and renewable energy, finding most of its opportunities in the mid-market segment.

STIC already has offices outside Seoul and Busan, including locations such as Ho Chi Minh City, Hong Kong, Shanghai and Taipei, as well as in California's Silicon Valley area. The firm is looking to hire in these markets.

It uses these offices to support investments with a Korean angle -- either companies linked to Korea or looking to enter the market. In a statement to AsianInvestor, Lim says STIC has been active in seeking and executing investment opportunities overseas.

"Korean mid-cap companies are looking for new growth opportunities outside Korea, particularly in Asia," he says. "We seek investments into their overseas subsidiaries or parent companies to support their growth. We are not seeking investments outside Korea because we think the Korean market is too small, but because Korean companies are growing."

Today, more than half of STIC's assets are raised from overseas investors, particularly the Middle East. It has been an early mover in Korea with regard to secondary private equity and sharia-compliant strategies.

It also has several big local limited partners, including Korea Teachers Pension Fund, Korean Venture Investment Corporation and the Military Mutual Aid Association. More recently, Korea Finance Corporation has helped seed a new M&A fund with $200 million.

STIC competes against global players using its local connections as well as on better valuations; it also sometimes co-invests with global private-equity firms. Its focus within the mid-cap universe is on growth and growth-buyout strategies at the later stage of the investment cycle. Its first PE fund, which closed in 2006, has an expected net investment rate of return of 25%, Lim says.