[Edaily Marketin YunJi Kim JI YEONG-EUI Reporter] TS Investment’s 18th M&A fund, currently under formation, is expected to exceed its initial target size thanks to a series of capital commitments from institutional investors (LPs). As discussions regarding additional capital commitments are currently underway, the final fundraising amount is expected to be even higher.

According to the investment banking (IB) industry on the 26th, TS Investment has secured more than 150 billion won in commitments for its 18th M&A fund. With about one to two months remaining until the fund is fully raised, the final size is likely to grow even further.

This fund is a blind fund that TS Investment began raising after being selected as the general partner (GP) for the corporate succession M&A sector under the first regular investment program of the government’s fund-of-funds this year. The government operates the business succession M&A sector to support M&A transactions for small and medium-sized enterprises (SMEs) facing difficulties in management succession due to an aging population and a lack of successors. The aim is to strengthen the virtuous cycle of investment, exit, and reinvestment in the venture capital market through funds dedicated to M&A and secondary investments.

This year’s corporate succession M&A sector is designed to raise at least 100 billion won by combining 40 billion won in capital from the master fund with private capital. Since TS Investment has already exceeded the minimum formation amount, it plans to broadly review M&A and buyout investment opportunities—including those involving small and medium-sized enterprises (SMEs) and mid-sized companies seeking succession—once the fund is established.

TS Investment has steadily built up experience in controlling-interest investments and value enhancement using M&A funds. In 2019, the company invested 14.7 billion won in Gonggu Woman through an M&A fund, participated in improving financial management and internal control systems, and led the company to a KOSDAQ listing in 2022. It also invested 10.4 billion won in Coats Technology through the same fund, recouping 27.9 billion won and achieving a 2.7x return on investment.

It is also seeing results from the exit process of its existing M&A fund. Last year, TS Investment sold its stake in Freed Life, recovering approximately 80 billion won, including dividends.

Industry observers believe that TS Investment’s accumulated M&A investment experience has contributed to the success of this fundraising round. Even as institutional investors’ due diligence has become more rigorous, it is assessed that funds continue to flow relatively steadily to asset managers with proven experience spanning everything from controlling-stake investments to value creation and exit strategies. Since success in corporate succession M&A is also determined by post-investment management involvement and exit strategies, a proven track record in buyouts is considered a key competitive advantage.

Meanwhile, in South Korea, as the first generation of entrepreneurs and owners of small and medium-sized enterprises (SMEs) grow older, corporate succession is emerging as a new investment opportunity in the M&A market. While it was once common to pass management control to family members, such as children, through family business succession, the increasing number of companies without successors or those unwilling to hand over control has led to the sale of equity and management rights to external investors being discussed as an alternative. In particular, policy funds are helping to revitalize this market, as they can prevent small and medium-sized enterprises (SMEs) with technological capabilities or market positions from shutting down due to succession issues, while simultaneously broadening exit opportunities for existing shareholders.