[Edaily Marketin, Reporter Song Seung-Hyeon ] Keystone Private Equity (Keystone PE) has secured the contract to operate public sports facilities in the Sinbanpo 4 District of Seocho-gu, Seoul. This is not a typical buyout—where a company is acquired and then resold—but rather a direct investment in the facility’s operating rights. It is unusual for a domestic private equity fund (PEF) manager to win the operating contract in a local government’s bidding process for the private outsourcing of public sports facilities.

According to the investment banking (IB) industry on the 18th, Seocho District announced on the 22nd of last month that Steady Co., Ltd. was the preferred bidder for the outsourced operation of the public sports facilities in the Sinbanpo 4 District. Steady specializes in the outsourced management of apartment complexes and sports facilities, and Keystone PE participated in this bidding process as part of a consortium with the company. Previously, at the eligibility review committee meeting held on the 20th of last month, seven companies submitted bids; Steady was selected as the top candidate, while Nextfield Co., Ltd. and Lagom Wellness Co., Ltd. were selected as the second and third candidates, respectively. The deadline for technical negotiations with Seocho District and the signing of the implementation agreement is the 24th of this month.

The facility in question is a building with two basement levels and five above-ground floors, completed last December within the Maple Xi complex at 60-3 Jamwon-dong, with a total floor area of 14,021 square meters. The facility will feature four indoor tennis courts on the third and fourth floors, a 13-bay indoor golf range and eight screen golf rooms on the second floor, a fitness center and café on the first floor, and a children’s sports facility on the fifth floor, while the two basement levels will serve as parking garages. The operator will fund the 6 billion won interior construction and equipment at its own expense in exchange for a five-year operating rights contract; following a review of eligibility, the contract may be renewed once, allowing for a maximum operating period of 10 years. Construction is scheduled for September through November, with the official opening set for December.

It is believed that Keystone PE took an interest in this project due to the nature of its cash flow. With a structure that generates monthly revenue from membership fees, usage fees, class fees, and parking revenue, the project ensures recurring revenue, and since the building is already completed, it is free from development risks such as permit delays or construction setbacks. Since the investor secures only the operating rights without acquiring the property itself, the initial capital investment is limited to the cost of construction.

There is also strong underlying demand. Maple Jai comprises approximately 3,300 households, and the Jamwon and Banpo areas are known for high demand for indoor tennis and premium fitness facilities. As the number of tennis players has grown rapidly in recent years, the supply of indoor tennis courts in Korea has been deemed insufficient to meet demand; this project effectively secures a four-court indoor facility within the complex.

This project marks a new venture for Keystone PE. Founded in 2012, Keystone PE made a name for itself through restructuring and buyout deals involving Dongbu Construction, Daewoo Shipbuilding & Marine Engineering Construction, and Hyundai Engineering & Construction; more recently, it expanded into the consumer goods sector by acquiring the wedding and catering company T&W Korea. Having established a third investment division this year to expand its investment targets into new growth sectors, the firm has now broadened its scope to include physical infrastructure—specifically, the operation of community sports facilities. As local governments increasingly entrust sports facilities—received as donations from redevelopment projects—to the private sector, this project could serve as a springboard for securing additional operations of similar facilities.

This bidding process was designed to be attractive to well-capitalized investors. Seocho District required bidders to demonstrate a track record of managing sports facilities within the past five years, hold a license for general construction or interior construction, and provide a letter of commitment from a financial institution for investment or a loan to cover construction costs. Since it is difficult for a single company to meet all three requirements, the district allowed up to four companies to form a joint venture to meet the eligibility criteria. This naturally leads to the formation of a consortium in which the facility operator handles day-to-day operations, a licensed construction company handles construction, and a financial investor (FI) provides funding.

Revenue will be shared with Seocho District. The operator must pay a mandatory reserve contribution to Seocho District within 7% of annual revenue, and any remaining net profit must first be remitted to the district before being distributed according to a predetermined ratio. The specific reserve rate and distribution ratio will be finalized during negotiations for the implementation agreement. In return, while the district will not compensate for operational losses, it will grant significant autonomy in setting fees and designing programs. At the end of the operating period, all facilities—including interior design and equipment—will become the property of Seocho District, and there is no obligation to restore the site to its original condition. Since this structure involves leaving behind assets worth 6 billion won, the key challenge will be whether the operator can recoup its investment and generate a profit within five years.