<article>South Korea&#8217;s <a style="color: #000080;" href="http://www.fsc.go.kr/eng/" target="_blank">Financial Services Commission</a>, the country&#8217;s financial regulator, today made its latest reform proposal to allow the public to invest in private equity funds.</article>

South Korea&#8217;s <a style="color: #000080;" href="http://www.fsc.go.kr/eng/" target="_blank">Financial Services Commission</a>, the country&#8217;s financial regulator, today made its latest reform proposal to allow the public to invest in private equity funds.
Individuals will be able to invest upwards of $4,200 in such funds. The upper limit of such investment will be 20 per cent of the fund&#8217;s total value.
Retail investors have demanded access to private equity funds at a time when low interest rates have depressed returns from term deposits.
The FSC started reforming the country&#8217;s financial sector last year, and has been introducing a series of measures. In May, it  started testing a system to make it easier for overseas investors to trade local stocks as part of efforts to be included in MSCI Inc.’s developed-market equity indexes.
A single omnibus account for foreigners transacting Korean equities will be tested in a simulation until September. Four offshore banks, two brokerages and a global investment firm are participating in the tests. The system is set to officially start next year.
The FSC said in a statement that the proposed measure to open up private equity funds to retail investors will allow for more variety of funds, and enable investors to get higher returns than what they can make from bank deposits. That in turn will help make the sector one of the nation&#8217;s economic drivers.
&#8220;The structure of the South Korean stock market will be reshuffled to promote competition among exchanges, attracting more listings. Private-equity fund rules will be relaxed so that money can flow to their optimal uses,&#8221; said FSC chairman Yim Jong-Yong in a <a style="color: #000080;" href="http://www.wsj.com/articles/south-koreas-financial-revolution-1464281959" target="_blank">recent article</a>. &#8220;We also seek to boost capital markets. South Korea’s financial market currently has an unbalanced structure, weighted towards banks, which tend to be conservative in nature. Spurring the development of capital markets will allow more funds to be channeled into innovative startups.&#8221;
This will also make it easier for private equity firms to raise funding, because the investor base — or limited partners as they are called in industry terms — might widen as a result of the reforms, said a <a style="color: #000080;" href="https://www.privateequityinternational.com/news/asia-pacific/2016-06-01/south-korea-opens-private-equity-to-retail-investors/" target="_blank">report</a> in Private Equity International.
South Korea saw 67 deals with transactions worth $15 billion last year, more than double of the levels seen in the year before, according to a report by consultancy Bain &amp; Co. Much of the deals have been in distressed sectors and cash-outs.
Last year, the country&#8217;s lawmakers had made it easier for managers to raise funds in the region and allowed companies to invest in funds in any asset class.
The Korean economy is going through a difficult phase with exports falling for more than a year and mounting levels of corporate debt that has made it difficult for companies to grow. The problem is particularly acute in the heavy industries sector which might see mass layoffs after the government of President Park Geun Hye pushed them to cut back on staff and sell unprofitable assets in return for financial support.
Reforms in the financial sector are expected to provide a boost to the economy once their details are finalized and they come into operation.
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South Korea's Financial Services Commission, today made its latest reform proposal to allow the public to invest in private equity funds. 

South Korea's latest reform: opening up PE funds to retail investors

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South Korea's latest reform: opening up PE funds to retail investors

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