Ex-Morgan Stanley Banker’s Fund Raises $3.4 Billion, Beating Asia Rivals

A passenger aircraft flies as the sun sets over buildings in Seoul, South Korea, on Saturday, Jan. 19, 2019. South Korea is scheduled to release fourth-quarter gross domestic product (GDP) figures on Jan. 22. Photographer: SeongJoon Cho/Bloomberg (SeongJoon Cho/Bloomberg)

(Bloomberg) -- Hahn & Co., a South Korea buyout firm founded by an ex-Morgan Stanley banker, raised $3.4 billion to close what is the biggest fund in Asia targeting one country this year, a person familiar with the matter said.

Founded by Scott Sang-Won Hahn, the fundraising includes a $140 million co-investment, the person said, asking not to be identified before a closing announcement later this week. Investors from Asia contributed 35% of the fund, US and Canada investors 30% and those from the Middle East 20%. 

The fund exceeded the $2.8 billion raised by Carlyle Group earlier this year for a vehicle dedicated to Japan. The closing beat Hahn’s own $3.2 billion target and comes as rivals such as PAG and Carlyle have recently struggled to raise the expected amounts for bigger Asia funds. 

A media representative at Hahn & Co. declined to comment.

More than 93% of investors in its previous fund, each with commitments that top $100 million, re-invested in the new pool with a bigger amount, the person said. 

Public pension and sovereign wealth funds have shifted away from China and doubled down in Japan and Korea, the most mature buyout markets in North Asia. They have also picked up investments in India as an alternative growth market to China.

Hahn & Co. has a track record of taking controlling stakes in subsidiaries of Korea’s family conglomerates. It has one of the highest distributions to paid-in capital among its Asian peers. Its previous $2.7 billion fund from 2019 has already returned 30% of its capital, the person said. 

Hahn & Co’s first two funds have posted net returns of between 20% to 25%, while fund III has generated 31%, the person said. 

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