Chief of financial watchdog says will look into PEFs-related risks

▲ Financial Supervisory Service Gov. Lee Chan-jin (Yonhap)

financial watchdog-PEFs

Chief of financial watchdog says will look into PEFs-related risks

SEOUL, Jan. 20 (Yonhap) -- The chief of the country's financial watchdog said Tuesday that his agency will look into risks related to private equity funds (PEFs), highlighting that illegal and unfair practices by some PEF operators may seriously undermine market principles.

In a meeting with the heads of a dozen PEFs here, Lee Chan-jin, governor of the Financial Supervisory Service (FSS), said it is important for PEFs to run based on market principles, but that public intervention may be inevitable in some instances when some players undermine market order and investor protection.

"(We) will deal with (such problems) strictly in accordance with laws and principles," he said. "In order to minimize the burden on markets, we will look into areas on which risks are centered, instead of adopting universal regulations."

His remarks came as MBK Partners, a major homegrown PEF, has been accused of allegedly selling short-term debts of its wholly owned retailer Homeplus around the time of the credit downgrade of the retailer.

MBK Partners acquired a 100 percent stake in Homeplus in 2015 from British retailer Tesco Plc for 7.2 trillion won (US$4.9 billion). The retailer, however, became financially strapped due to a slump in the discount store industry and eventually entered court-led rehabilitation proceedings in March last year.

Lee also urged PEFs to play a role in productive finance and step up their efforts to boost market confidence.

As of 2024, 1,137 PEFs had committed capital of 153.6 trillion won (US$103.9 billion), according to data from the FSS.

(END)

(C) Yonhap News Agency. All Rights Reserved