[Edaily Marketin JI YEONG-EUI Reporter] Efforts to launch the Private Equity Fund (PEF) Association, which is intended to serve as a central hub for domestic PEF managers, are failing to gain momentum. With approximately 92 member firms—each with varying assets under management (AUM) and divergent interests—it is taking longer than expected to reach a consensus on issues such as membership fees, voting rights, and the selection of the inaugural chairman.

The fact that MBK Partners, the industry’s largest manager, has withdrawn from the Executive Committee—the council’s key decision-making body—and that Han & Company has completely withdrawn from the council is also cited as a challenge in terms of representativeness. While there is a consensus on the association’s founding purpose—to respond to moves to tighten regulations targeting the PEF industry following the Homeplus incident and to establish self-regulatory functions—there remain significant differences of opinion regarding how to allocate the costs and authority needed to support these efforts.

Aiming to Launch the Association in October, but… “By the End of the Year at the Latest”

According to the investment banking (IB) industry on the 27th, the Private Equity Fund Managers’ Council is gathering feedback from member firms with the goal of formally launching the association this coming October. The plan is to launch in October—the original target—if possible, but if the schedule is delayed, the transition process will be completed by the end of the year. While there had initially been speculation that a provisional general meeting would be held around next month to resolve on the transition to an association, it is understood that the council determined more time was needed to persuade member firms and prepare a concrete organizational operating plan. The council is currently meeting directly with representatives of major member firms to explain the necessity of the transition, its expected benefits, and the rationale behind the membership fee increase.

An official from the PEF Managers Council stated, “Above all, member participation is crucial for the transition to an association,” adding, “The process of explaining the benefits of becoming an association and listening to their opinions is taking somewhat longer than expected.”

The official continued, “We plan to launch in October as originally targeted, if possible, and even if there are delays, we aim to complete the transition to an association by the end of the year,” adding, “Since there is still time remaining until October, we will proceed with the necessary preparations as quickly as possible.”

The Council has been operating as an unincorporated association without legal personality or a permanent secretariat. Once the transition to an association is complete, it will become a non-profit corporation under the Civil Code, equipped with a permanent secretariat and dedicated staff, and will serve as an official channel for gathering member companies’ opinions and conveying them to the National Assembly and financial authorities. However, since the establishment of a non-profit corporation requires approval from the Financial Services Commission—the competent authority—procedures such as member company resolutions, organizational structure, and the preparation of revenue and expenditure budgets must be completed first.

Reaching a “Unanimous Consensus” on Costs and Representation Proves Challenging

One area of disagreement among member firms is

costs

. It is estimated that the transition to an association will require annual operating expenses of around 1 billion won for office rent, salaries for full-time staff, and policy and legal consulting fees. This will inevitably result in a different cost structure compared to the existing council, which has operated without a dedicated organization.

The council recently notified member firms of a tiered annual membership fee structure based on AUM. Asset managers with AUM exceeding 3 trillion won will pay 50 million won annually; those with AUM between 2 trillion and 3 trillion won will pay 35 million won; and those with AUM between 1 trillion and 2 trillion won will pay 25 million won. For firms with AUM between 500 billion won and 1 trillion won, the fee is 10 million won; for those with AUM between 100 billion won and 500 billion won, it is 5 million won; and for those with AUM of 100 billion won or less, it is 1 million won. This approach ensures that large firms bear a greater share of the costs while lowering the barrier to entry for small and medium-sized firms.

Previously, medium- to large-sized asset managers with AUM of 1 trillion won or more paid 10 million won annually, while small and medium-sized firms paid roughly half that amount. With membership fees for large asset managers increasing by up to five times, some member firms have reportedly raised concerns regarding the practical benefits of the association’s operations and the cost burden.

While there is general agreement on the principle of differential membership fees based on AUM, assessments indicate that interests diverge regarding the specific burden levels for each bracket, whether large firms should make additional contributions, and the extent to which voting rights should correspond to membership fees. Large firms may demand influence commensurate with their financial burden, but small and medium-sized firms are wary of the possibility that the association could be operated primarily in the interests of a few large asset managers.

The Council recently amended its bylaws to grant member firms voting rights on a sliding scale based on AUM. While this measure is intended to encourage participation by large firms by linking financial contributions to voting rights, the challenge remains of adjusting the disparity in influence based on firm size to ensure representativeness for the industry as a whole.

MBK Withdraws from Executive Committee; Han & Co. Withdraws from Association

The weakening participation of major asset management firms is also posing a burden during the transition to an association. It has been confirmed that MBK Partners has maintained only its status as a general member of the council since the second half of last year and has withdrawn from the Executive Committee. The Executive Committee is the core decision-making body where representatives of major asset management firms hold monthly meetings to discuss the council’s operations and key issues. The seat vacated by MBK’s withdrawal from the Executive Committee was filled last October by KLN Partners, a mid-sized asset management firm. MBK currently does not attend regular Executive Committee meetings but communicates with the council during general meetings or when specific issues arise.

Additionally, Han & Company, which competes with MBK Partners for the top two spots in the industry, withdrew completely from the council this year. At a time when the association is preparing to transition and needs to broaden its industry representation, major firms have effectively withdrawn from core decision-making or relinquished their membership status.

The number of member firms is increasing. Since the start of this year, a total of nine asset management firms—including Metiston Equity Partners and DJ & Lee Investment Partners—have joined. Considering that two firms—Han & Company and one small asset management firm—have left, the net increase in members since the beginning of the year stands at seven.

Although the association is expanding, observers note that establishing a single set of operating principles is a difficult task given the wide range of members, spanning from large firms to start-ups and small-to-medium-sized firms. The key challenge lies in finding common ground between large firms, which urgently need to strengthen their government relations capabilities, and small-to-medium-sized firms, which are sensitive to the costs of association membership.

Bureaucrat or Industry Veteran… Selection of the First Chairman Is Also a Variable Selecting

the

first

chairman of the association is another challenge that must be addressed. According to the existing rotation system, StoneBridge Capital is next in line to hold the chairmanship, with CEO Hyun Seung-yoon set to assume the role. However, the council is considering a plan—separate from the existing rotation system—to appoint a widely respected industry veteran as the first chairman to mark the official launch of the association.

Some have suggested that a former high-ranking bureaucrat should be recruited to enhance the council’s ability to respond to policy issues involving the National Assembly and financial authorities. On the other hand, the current executive board is leaning toward the view that a former or current CEO of an asset management firm—who fully understands the PEF industry and day-to-day operations—would be the most suitable candidate.

A representative of the PEF Council stated, “We are considering a plan to appoint a senior figure who is widely recognized within the PEF industry, including both current and retired professionals,” adding, “While there are discussions about recruiting a former government official, the current executive board is prioritizing the appointment of someone with industry experience.”

No specific shortlist of candidates has been finalized yet. Since decisions must be made regarding whether the chairperson will serve full-time, as well as their compensation, authority, and division of responsibilities with the secretariat, the selection process could potentially affect the overall launch schedule of the association.

“Failure to Meet Public Expectations”… Self-Regulation Put to the Test

The core rationale behind the Council’s push to transition to an association is

self-regulation

. Following incidents such as the Homeplus scandal, public opinion has grown in favor of strengthening responsible management and information disclosure by PEF managers, and with ongoing regulatory discussions in the National Assembly and among financial authorities, the industry has determined that there is a growing need to establish its own internal controls and principles of responsible investment. Recognizing that the recent management practices of some PEFs have fallen short of public expectations, the aim is to strengthen self-regulatory functions through the transition to an association and restore public trust in the industry.

However, with MBK—which served as the direct catalyst for the self-regulation debate—withdrawn from the executive committee and Han & Company having also withdrawn from the council, it remains uncertain whether the association will be able to enforce effective regulations across the entire industry. Given its structure as a non-profit corporation with limited legal authority to compel membership or compliance, critics point out that without the active participation of major fund managers, the association’s representativeness and regulatory power could be weakened.

A representative of a private equity fund (PEF) stated, “While most agree on the need to transition to an association, the roles expected of large firms and those of small and medium-sized firms differ, as do the costs they can bear,” adding, “Rather than simply changing the name to an association, creating self-regulatory standards and a decision-making structure that the entire industry can follow is a more important issue than the timing of its launch.”