Here are a few posts looking back and looking ahead:

A number of commentators have pointed out (here, here, and here) Korea’s increasingly aggressive entry into the solar and cleantech space. The fact that the largest solar-photovoltaic funding in 2011 came from a group of Korean VCs is definitely a big part of that.

This article from the Korean Herald discusses the big changes coming to Korea’s financial landscape over the next year, including the privatization of Woori financial and new laws granting securities firms and IBs the ability to extend credit.

Yonhap reports that foreign investment banks have released their growth predictions for South Korea’s economy in 2012.

Last but not least, here is a good 2011 wrap-up post from the Korea IT Times and another covering the top Korea technology as awarded by the Ministry of Knowledge Economy’s 2011 Korea Technology Awards.

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Christopher Snell

We at Private Equity Korea wish all of our readers a happy, healthy, and prosperous 2012.

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We will be updating the blog’s layout and design over the coming weeks. Think of it as a new look for the new year. We would like to ask for your patience and understanding as we work the kinks out of our new design. If you experience any difficulties in accessing the site, please remember that in the meantime you can continue to get updates from our Twitter account. Thank you!

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UPDATE: Renewable Energy World also has a piece which describes Korea’s advances into the solar market.

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Hanhwa Asset Management announced on December 20 that it has established the “Hanhwa Solar Energy Private Equity Special Trust No. 2” a new fund making blind investments in Renewable Portfolio Standard companies, the first of its kind in Korea.

The fund is to work with Korea’s new RPS program which starts next year, by creating a fund of up to 200 billion won to invest in companies responsible for the construction, management and operations of solar power stations.

RPS refers to a system, created by the Minister of Knowledge Economy and the President which is intended to promote the use of renewable energy and invigorate the renewables sector by requiring 13 public and private power generation companies to produce a certain proportion of their output from renewable sources.

In the case of solar energy, to satisfy the production quota, the group must install solar power stations with a capacity of 1200MW by 2016. The power companies may construct solar power generation facilities themselves, or source energy produced by private solar power producers and purchase Renewable Energy Certificates.

Blind investment means that the target of the fund has not been chosen when funds are raised from investors.

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Subsidiaries of conglomerates such as Samsung, LG, SK and Lotte Group will be offering up shares due to large amounts of corporate bonds maturing in 2012 and companies’ needs for liquidity to fuel expansion plans.

The article also mentions a possible IPO from publicly-owned Korea Development Bank. KDB may try to add consumer banking services to boost its valuation and some have reported that it may buy HSBC’s retail banking units.

The article also explains that many Korean companies are looking into overseas IPOs as an aid to operations abroad, with many eyeing Hong Kong as a potential bridge to the Chinese market.

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Stion will establish a subsidiary in Korea, to be named Stion Korea, and will make a $35 mn initial investment to build a thin-film module factory to help serve the Asian and European markets.

The transaction also includes a strategic partnership with AVACO, a leading provider of thin-film processing equipment. The two parties will collaborate to develop next generation thin-film production equipment, focusing on lowering costs, improving tool productivity and increasing module efficiency.

“This investment and partnership represents an exceptional opportunity for Stion,” said Chet Farris, Stion’s President & CEO. “Solar has always been a global business and this investment enables Stion to address market demand in Asia and beyond. We have added world-class investors as well as a strategic partner with deep technical expertise.”

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The Variety article quotes  Sovik’s Park Hyun Tae saying, ”Route One Films is an ideal partner to help the Korean content industry travel overseas, especially to the U.S.” The company apparently has has plans for 16 projects in the works and aims to produce  up to two films a year.

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Korea has moved up six spots since last year,  due mainly to improved scores in financial intermediation, specifically in the banking and non-banking financial services areas. Despite this year’s improvements, Korea is still held back by difficulties in facilitating access to capital, especially by a lack of venture capital availability, difficulty in obtaining access to loans, and a low level of FDI.

For the first time, Hong Kong topped the list, with the U.S. and the U.K. following behind at 2^nd and 3rd.

To view the report in its entirety, download the PDF at this link.

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They have yearly sales of 3.5 billion won, have had the leading technology in the video search market since their foundation in 2006, but they are almost unheard of by most people. We’re talking about a venture company called Enswers. Enswers has recently had some big developments. On December 5, Enswers was acquired by the 45 billion won telecommunications company KT, making the transaction one of the largest domestic acquisitions of a venture company.

Within the industry it was hailed without exception as a successful exit.  Enswers vice president Joonpyo Lee said of the sale, “This means that all of our hard work has been recognized and it makes me happy.” Employees are also expressing their satisfaction at their company now being the subsidiary of a major firm.

However, some have also taken a negative perspective, claiming that KT has cut down the promising venture. This goes to show how negative domestic attitudes towards the acquisition of venture companies can be. “The idea that a company provides a job for life is still strong and this leads to a vague sense of anxiety and loss whenever there is restructuring following an M&A.”, said Bon Angels CEO Seokheun Kang. “During the venture boom of the early 2000s, companies’ fortunes were tied to foreign capital and there were cases of shareholders ‘eating and running’ causing this stigma to spread.” Kang explained.

However, there are indications of a change. This is because M&As are vital to the invigoration of startups and venture companies. Domestic voices are speaking of the need for the same type of Google-style M&A model that has been enriching the Silicon Valley venture ecosystem. Amidst the software industry’s difficulties M&As can act as a primer for the development of the venture environment.

The Enswers case can become a positive example of venture technology and VC investment blossoming through an M&A.  In 2006, before Enswers’ was officially established as a company, it received a 300 million won investment from Bon Angels Venture Partner. This was recognition of their visionary technology.

Bon Angels also has a history with funding from an M&A. In 2006 Bon Angels CEO Byeonggyu Jang sold his former search engine company 1noon to NHN for 35 billion won. With the funds earned from the sale, Jang founded the early stage investment firm and invested in a number of startups including Enswers.

After receiving investment, Enswers absorbed itself with improving its technology and in the process got noticed by KT. KT has agreed to keep Enswers employees while leveraging the two companies’ synergy. Enswers is also counting on KT’s capital and international network to help it produce new growth. Bon Angels has profited greatly, reaping a 10 times return on its investment. This has been a win-win situation for all parties.

Prior to the KT-Enswers deal, there is another relevant case. In August Ticket Monster was acquired by America’s LivingSocial. Unlike Enswers, at the time reactions to the Ticket Monster sale were overwhelmingly critical.

Ticket Monster was mainly responsible. As the first domestic company to enter the social commerce space, Ticket Monster was plagued by rumors of an M&A immediately after its founding in May 2010. In particular they were criticized for undertaking large advertising campaigns before having a stable revenue model prompting some to ask if it was all an attempt to inflate the company in order to sell it. After denying rumors of the sale several times, the company was sold to LivingSocial, prompting mostly negative reactions and accusations of “eating and running”.

After the sale, Ticket Monster CEO Hyunseong Shin said that it was “his most trying time since founding the company”. The criticism coming from those around him were more difficult than all of the work he put into establishing the company.  Despite being sold to a foreign company, Ticket Monster has continued operations without changing a single employee, including the CEO.

Of course, at the time, not everybody was critical. There may have been doubts about Ticket Monster’s actions but nobody was criticizing M&A’s themselves.

The recent spread of mobile service has led to a new boom in startups and the first generation of venture companies are emphasizing that more M&As equates to a sort of virtuous cycle.

Ablar CEO Jeongseok Roh, who as founder of Tatter and Co. sold the company to Google in 2008 emphasized, “Those who dream of starting their own venture company need to see the success stories of other startups” Roh actually advised Ticket Monster during the early stages of their business.

Former 1Noon CEO Byeonggyu Jang said, “Even though it’s hard to produce a huge success like Facebook, the opportunities for larger exits are continuing to increase.”  He added, “There are many ways in which M&As can contribute to the development of the venture ecosystem.” Jang is the perfect example of how M&As can act as a virtuous cycle in the startup world.

Another individual related to the industry explained” People see these entrepreneurs go on to start new companies or get into investing after successful exits and they end up having their own dreams of founding a startup.” He continued by saying, “Amongst the waning domestic IPO situation, M&As are one of the main ways to help develop the venture landscape.”

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