[Edaily Marketin Reporter Song Seung-Hyeon ] With the launch of the 200 trillion won National Growth Fund on the horizon, private equity (PEF) firms are accelerating efforts to deploy their dry powder and secure exit performance, bringing a wave of optimism to the mid-market PE deal scene. A prime example is the bidding war for medical display manufacturer D&T, which has attracted more than six potential buyers.

According to the investment banking (IB) industry on the 4th, Highland Equity Partners (Highland PE), the largest shareholder of D&T, recently selected Eum PE as the preferred bidder for the acquisition of D&T. This acquisition process drew significant interest, with more than six firms—including Genesis Private Equity, SkyLake Equity Partners, and Keystone Partners—participating in the preliminary bidding. Notably, it is reported that the bids submitted exceeded the seller’s expectations. Market estimates put the value at between 400 billion and 500 billion won. Keystone, which submitted a substantial bid alongside Eum PE, narrowly missed out on the deal after offering a price slightly lower than Eum PE’s.

Highland PE’s push to accelerate the sale is driven by its goal of securing a strong track record of returns through an ultra-short-term exit. Highland PE acquired a 92% stake in D&T for 172.7 billion won in July 2024. This means it is pursuing the sale at more than double the enterprise value after holding the stake for just over two years. It is reported that Highland PE aims to finalize the acquisition by November.

Furthermore, analysts suggest that Ium PE’s aggressive bid is not unrelated to the National Growth Fund. Since a track record of deploying dry powder and a proven investment track record are essential for applying to the National Growth Fund’s investment programs, there is a strong incentive to close the deal even if it means accepting a premium in the bidding war. Ium PE raised its second standalone blind fund, totaling over 500 billion won, at the end of last year.

The National Growth Fund is a 200 trillion won policy fund established by the government to support the growth of innovative companies. A high dry powder utilization rate and a strong track record can work in a firm’s favor during the review process. This is why domestic mid-sized PE firms are staking their all on deal sourcing and exits in the second half of this year, ahead of next year’s investment initiatives.

Keystone’s entry into the D&T acquisition race is part of this same trend. Keystone is rapidly depleting its dry powder, having deployed approximately 200 billion won within just three months from its sixth blind fund—which closed at 662 billion won in April of this year. Industry observers expect Keystone to achieve a deployment rate of 70–80% by year-end, after which it will proceed with the formation of its 7th fund and preparations for the National Growth Fund investment initiative. Its participation in the preliminary bidding for D&T is seen as an extension of this strategy.

Given this situation, mid-sized PE firms are engaging in aggressive bidding wars for promising investment targets. The recent deal involving Yulgok, an aircraft parts manufacturer that selected VIG Partners as its preferred bidder, fits into this same context. Five firms—including VIG Partners, Stick Investment, Anchor Equity Partners, Premier Partners, and KCGI—participated in the final bidding round for Yulgok. This is also seen as an example reflecting the need among mid-sized PE firms to deploy their dry powder on solid investment targets.

A private equity industry insider stated, “With the National Growth Fund on the horizon, GPs are stepping up their efforts to build a track record, creating an atmosphere where buyers are lining up for virtually any mid-market deal,” adding, “However, there are concerns that excessive competition over valuations could put pressure on fund returns in the long term.”