'Era of the founders fading' — a new wind blows through Korea's private equity market

A wave of generational change is sweeping through South Korea's first-generation private equity fund managers, reshaping the landscape of the domestic market.

According to investment banking industry sources Wednesday, leadership succession at first-generation general partners and a parallel push by mid-level practitioners to establish independent GPs are driving a structural transformation of the domestic private equity market this year.

The most prominent houses to undergo leadership transitions this year are IMM Private Equity, Stic Investments and VIG Partners.

At IMM Holdings and IMM Co., the three co-founders were promoted to vice chairman last year and stepped down as chief executives, opening the door to a generational shift and governance overhaul. Under the new structure, IMM Holdings Vice Chairman Song In-jun serves concurrently as board chairman of both IMM Holdings and IMM PE, overseeing the group as a whole. IMM PE is led by President Son Dong-han alongside Kim Young-ho, who holds the president title at both IMM Holdings and IMM PE, cementing an accountability-driven management system.

At Stic Investments, founder and former Chairman Do Yong-hwan sold his stake and stepped aside earlier this year, handing the reins to a professional management structure centered on Vice Chairman Kwak Dong-geol, who had driven the firm's growth. VIG Partners also moved to consolidate leadership around CEO Shin Chang-hun this year, advancing the firm's transition to a still-younger generation.

Industry insiders view the generational shift as inevitable. The first-generation figures who laid the groundwork for the private equity market in the early-to-mid 2000s have reached the point of retirement or transition to advisory roles. Above all, analysts say the sector has arrived at a structural inflection point where firms must move away from dependence on individual founders and evolve into institutionalized houses.

Alongside governance succession at the larger firms, some mid-level practitioners who handled day-to-day deal work are striking out to launch independent GPs. Behind their decision to go independent is a desire to capture niche markets that so-called mega funds cannot easily address. As assets under management at first-generation firms have grown into the multi-trillion-won range, pursuing mid-market buyouts or specialized deals has become relatively harder for them — whereas independent GPs can move quickly and deploy sector expertise to freely target high-quality assets.

The challenges, however, are considerable. GPs undergoing leadership transitions must demonstrate through actual performance that their track records can be sustained under the next generation. Newly independent GPs must raise funds without the backing of a major firm's brand, and face the added pressure of successfully threading every step — from sourcing their first portfolio to achieving an exit — in what amounts to their debut as a standalone operation.

Institutional investors have largely welcomed the changes. "It is true that some houses have felt somewhat rigid," one LP official said. "When younger leadership takes over, more energetic and proactive people tend to come to the fore, and the culture of the house can feel refreshed." At the same time, LPs are conducting thorough due diligence on governance stability — checking in particular whether internal conflicts have emerged during the succession process.

However, some analysts caution that leadership changes or the departure of mid-level talent are unlikely to become the decisive factor in actual investment commitments. "Generational transitions or talent-attrition issues may be a marginal consideration at the shortlisting stage, but they are hard to treat on their own as a definitive reason to withhold a commitment," another LP official said. "LPs' final assessments come down to numbers — deal size, historical track record — rather than qualitative factors."