Premier Partners on the verge of acquiring 85% of Korea Fund Partners, ‘betting’ on ETF growth [fn Market Watch]

[Financial News] Domestic private equity firm Premier Partners is on the verge of acquiring an 85% stake in Korea Fund Partners, the country’s third-largest fund administrator. The company is a financial infrastructure asset that can generate recurring fee revenue as the exchange-traded fund (ETF) market grows. The deal is seen as an expansion of Premier Partners’ investment scope through a control acquisition, following its origins as a venture capital firm.
According to investment banking industry sources on the 4th, Premier Partners and the sellers of Korea Fund Partners are in final negotiations, aiming to sign a stock purchase agreement (SPA) as early as mid-month. Premier Partners completed due diligence after being selected as the preferred bidder in July. The parties plan to close the deal in mid-December, after signing the agreement and obtaining approval for the business combination.
The sale involves an 85% controlling stake, including the 65.1% stake held by majority shareholder PTA Equity Partners. Mirae Asset Consulting, the second-largest shareholder, is also exercising its tag-along right to sell a 15% stake. It has decided, however, to retain a portion of its shares and remain the second-largest shareholder, given that Korea Fund Partners is the principal fund administrator for Mirae Asset Global Investments Co., Ltd. The company’s enterprise value (EV), based on 100% of its shares, is under discussion in the mid-₩600 billion range. This represents a mid-teens multiple of this year’s projected EBITDA. Operating profit and EBITDA are each forecast to exceed ₩40 billion next year. Premier Partners plans to put about ₩240 billion of the purchase price toward the deal from Fund VI and raise the remainder through acquisition financing arranged by NH Investment & Securities.
PTA Equity Partners acquired what was then Mirae Asset Fund Services from Mirae Asset Financial Group in late 2021, subsequently renaming it Korea Fund Partners and expanding its client base.
Korea Fund Partners calculates fund net asset values, handles accounting and provides operational support. It ranks third in the industry, after Shinhan Fund Partners and Hana Fund Services. Assets under administration exceeded ₩180 trillion last year, giving it a market share of about 17%. Its clients include Mirae Asset Global Investments Co., Ltd. and Timefolio Asset Management.
The company’s core strengths are recurring fee revenue and high barriers to entry. When an asset manager switches fund administrators, it must integrate IT systems and transfer and validate data, making the switching costs substantial. The expense of specialized staff and systems investment also limits entry by new providers.
Growth in the ETF market is a particular driver of revenue expansion. The net assets of domestic ETFs rose about 54%, from ₩297.1401 trillion at the end of last year to ₩457.7256 trillion at the end of September this year. Korea Fund Partners, with its established base of ETF fund-administration clients, stands to benefit directly. Tighter internal controls for private equity firms and revisions to information-management regulations by financial authorities are also cited as factors that could increase demand for specialized fund administration.
Hana Financial Group Inc., Celltrion and global fund administrator SS&C, among others, expressed interest in the acquisition. Hana Financial, which owns the industry’s second-largest fund administrator, Hana Fund Service, could have vaulted to the top spot by acquiring Korea Fund Partners, but Premier Partners ultimately prevailed.
Founded in 2005, Premier Partners has about ₩4 trillion in cumulative assets under management. Its investors include the National Pension Service, the Korean Teachers Credit Union and Ardian. In February, it formed Fund VI, a blind fund worth about ₩1.2 trillion. Its Fund V previously invested in SK ecoplant, EcoPro BM, Moloco and Vaim, among others. Korea Fund Partners is expected to be a key investment for Fund VI.
[email protected] Kang Gu-gwi Reporter