Benson Lee Filmmaker Sony Pictures Entertainment

John Lagerling Director, Android Global Partnerships at Google

Troy Malone Evernote General Manager, Asia Pacific

David Lee  Co-Founder, Seoul Space / Co-Founding Partner,  XG Ventures / Venture Partner,  SK Telecom Ventures

Jay Henningsen Director, Emerging Business Team, Microsoft

Janice Fraser CEO/Principal, LUXr

Arne Roomann-Kurrik Developer Advocate, Twitter

Winners will receive cash prizes of up to 10 million won as well as opportunities to participate in KOTRA programs supporting IT companies, including placement in KOTRA’s overseas IT Support Centers, and recommendation for investment by Korea’s Global Win-Win Fund.

To find out more, visit the Startup Battle Korea homepage (Korean) or contact startupbattlekorea@seoulspace.co.kr

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As part of its foreign investment promotion efforts, Invest KOREA will hold Korea PE Insight 2012 in San Francisco on June 26 and in New York City on June 28. Korea PE Insight will bring together representatives from Korea’s leading private equity and venture capital firms. The event is intended to give participants the chance to learn about investment opportunities in Korea’s private equity market, meet with fund managers, and make connections with industry professionals.

Korea PE Insight 2012 will feature panel discussions by Korean fund managers who will share strategies and talk about recent issues relevant to the industry. There will also be opportunities to conduct 1:1 meetings with Korean GPs to candidly discuss their individual investment approaches and fund-raising plans. A networking luncheon will also provide participants with additional chances to make connections and build upon existing relationships.

Please see this pdf brochure for a more in-depth look at the program. Those interested in attending or participating should contact Ross Geesman via email at rgeesman@kotra.or.kr or via telephone at +82-2-3460-7536.

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Deal Sourcing Opportunities

• 1:1 Meetings with Korean firms seeking investments
• Opportunities for meetings with major Korean GPs and LPs

Insightful Speeches and Panel Dicussions

Confirmed participants include:

• Yeong Shik Yang  National Pension Service
• Park Yong Deuk Korea Investment Corporation
• Hoon Jang  Korea Finance Corporation
• Won Hee Lee  Korea Post
• Yu Shin Jeong  Korea Venture Investment Corporation
• Hiroaki Saito Capital Dynamics
• Hwae Hoon Jeong  DFJ Athena
• Teppei J. Kono  Unison Capital
• Hae Joon Lee  IMM Private Equity
• Kang Seok Lee  Skylake Incuvest
• Jeong Heon Yu  Mirae Private Equity
• Jong Hoon Kim EQ Partners

Discussion Panels and Informative Presentations

• Investment trends, strategies, and opportunities in Korea and Asia
• Sovereign wealth fund asset allocation & investment strategy
• Strategies for international and Korean GP cooperation
• Korean institutional investor diversification and geographic asset allocation strategies

Diverse Attendees

• Institutional, private equity, and venture capital investors
• Korean corporations, industry specialists, and advisers

For a provisional schedule, please click here. Please note that the details will be subject to change.

Register to attend HERE.

For  inquiries, please contact:

Ross Geesman

rgeesman@kotra.or.kr

+82-02-3460-7536

Here are a few images from last year’s event.

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Could you introduce Fast Track Asia?

Chester Roh (Ablar), Hyun Sung Shin (Ticket Monster), Stonebridge Capital, and Insight Venture Partners are the main partners. Chester Roh and Hyunsung Shin are investors and participate as advisers. I represent Stonebridge Capital and Dan Francis represents Insight Venture Partners on the board of directors. The four of us make up the board committee. Outside of that we have an operations team made up of 13 staff members. Stonebridge is a shareholder in Fast Track Asia and I represent Stonebridge as a board member. We all ended up working together through the Ticket Monster deal, Dan was the investment manager at Insight. We all talked a lot and found that we worked well together, so we decided to team up for Fast Track Asia.

So is Fast Track Asia really more of a venture capital firm?

We actually aren’t a venture capital firm, we’re a corporation and our main activity is startup company incubation.

So, what makes Fast Track Asia different from other incubators?

There are three main differences.

The first is that we have more full time employees than other incubators. Most incubators are started by a small minority of successful entrepreneurs. When one of the companies they are incubating needs, say for example, a marketing director, the incubator would just introduce them to a marketer from their personal network. Fast Track Asia has a full time headhunter on staff that is responsible for maintaining a talent pool. In this way, we can set up PR, HR, finance and even the development team. We have invested a lot of resources into making a system to handle this function.

The second difference is that our companies don’t have to worry about money. In Fast Track Asia, if companies grow according to scheduled milestones, there is no need to worry about funding. In our program, at each stage, Stonebridge and Insight Venture Partners will provide investments. From the first 100 won, all the way up to tens of billions of won, we can take on the full cycle.

The third difference is that we don’t exclusively target tech companies. There are so many business models, but we are focused on those that can be accurately and quickly put into action. Because of this, we can’t incubate a company like Enswers.

Given that your name is Fast Track Asia, what do you see your direction being in terms of the markets you address? Are you open to taking your companies to North and South America and Europe or will you focus just on businesses that work in Asia, or only in Korea?

Fast Track Asia is an incubator, but we are an incubator with a very practical sensibility. In the domestic media, everybody is talking about guys like Y-Combinator but in reality, if you look to Europe and other countries, there are a wide variety of different types of incubators. So we thought, practically speaking, “Can we take this incubating service and go all the way to America?” We are mainly targeting Korea, Japan, and South East Asia. Because China is so large, it’s difficult to talk about. Extending from Korea to Japan? That can be done relatively quickly. We are launching a company, Good Doc and a Japanese version will be ready to launch in Japan soon. Going to South East Asia won’t take too long either and we plan on expanding in this order.

I have heard some make comparisons between Fast Track Asia and Rocket Internet. Do you see yourselves as the Korean version of Rocket Internet?

There is one entity behind Rocket Internet. Rocket Internet’s portfolio companies’ equity structure is different from ours. I can’t get into the numbers but Rocket Internet applies a single rule to its portfolio companies but we are very flexible. I’m not trying to disparage them at all, I think their business model is great and one of many viable models. However, if we were to try to be like Rocket Internet, we would have to select three to four business plans per year and launch them in around 30 countries simultaneously and expand very quickly. That requires a lot of capacity. While we worked on the Ticketmonster deal, we felt that we could never do what they’ve done. The Korean market is a little strange. We felt that there are some business models that should have been tried that haven’t yet. We are going to try to take these models and successfully execute them with the best personnel that Korea has to offer.

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Tell our readers about your role at Citi and your experience with Korea. What deals have you worked on here?

I work in Citi Global Healthcare Investment Banking, which is a fully integrated team based out of New York with over 80 bankers spread throughout the world.  Citi boasts one of the largest global healthcare investment banking teams on Wall Street.  I moved to Hong Kong last year to serve healthcare clients based in the Asia Pacific region.  Prior to coming to Asia, I was based in New York specializing in healthcare M&A for 7 years.  Previous to that, I spent 3 years as a public accountant at Ernst & Young in Los Angeles covering large healthcare clients.  So I have been working in healthcare my entire professional career.

Citi is ranked in the top tier amongst global investment banks in Korea.  For example, Citi is ranked #1 in terms of cumulative M&A transaction value over the past ten years, including advising on 5 of the 10 largest cross-border M&A transactions to date.  Our debt and equity capabilities are also ranked at the very top compared to global peers.  With that said, Korean healthcare has never been a focus area for us until recently.  I believe we are at the cusp of a healthcare boom across Asia.  I spend most of my time covering China and Korea, since that is where most of our healthcare clients are located.  Given the confidential nature of the various deals we are currently working on, I’m afraid I cannot disclose much at this juncture.

You said we are on the cusp of a healthcare boom in Asia. What do you see happening in the M&A market in Korea in 2012? What do you think the main forces driving deals will be?

I think it’s useful to understand what is going on with the global markets, and then drill down to conditions in Korea.  Citi’s view is that the global macroeconomic environment will remain fragile and the sustained market volatility will influence every strategic decision in 2012.  No firm, however large or small, is immune from this reality.  Despite these challenges, the global corporate sector is entering 2012 in a significant position of strength, with strong financial and operating performance, and healthy cash reserves.  In terms of the stock market, we are bullish in Korea for 2012, and believe that Korean equities could outperform their global and Asia Pacific peers.  Korean companies have solid near- and medium-term growth momentum and are relatively undervalued in relation to that growth.

There are many forces at work including regulatory, political, social, and business capacity trends, but when you are faced with limited organic growth and value distortions, one of the best ways to invest is by pursuing M&A.  Many managers and investors may think that pursuing M&A during volatile markets is risky but evidence suggests that buyers in high-volatility environments see their shares outperform.  With this backdrop combined with the fact that Korean executives are becoming very sophisticated, I expect to see another strong deal-making environment this year in Korea.

As far as healthcare goes, I believe we are at an important inflection point in Korea.  Unlike the export-centric industries like autos and electronics, healthcare demand in Korea is largely insular and driven by local regulatory and market forces.  Despite strong underlying fundamentals, the Korean healthcare sector appears to suffer due to market saturation and fragmentation.  For example, there are approximately 250 pharmaceutical companies in Korea.  In a USD 12 billion market (at consumer prices), that means the average pharmaceutical company generates about USD 50 million in revenue.  Given the perfect storm of drug reimbursement cuts and increased pressure for innovation-led growth, it will become increasingly difficult for smaller players to compete.

This is a complex and sensitive situation but I think it would be a net positive if we saw more M&A/consolidation in Korea healthcare, particularly in pharmaceuticals.  There have been some major announcements over the past 18 months in Korean healthcare and I believe this is just the tip of the iceberg in terms of unlocking the potential of Korean healthcare industry.  If Japan can produce global healthcare companies like Takeda, a major player with market cap of USD 33 billion, I don’t see why we can’t see something similar in Korea.  By the way, there are some very interesting parallels between the two nations’ pharmaceutical industries.  It’s also worth mentioning that even today, the largest company on KOSDAQ by market cap is Celltrion, a home-grown, global biotech.

Based off of your experiences in Korea, do you have any advice for those who are considering investing here?

Investment in any healthcare industry requires careful consideration of the regulatory and legislative environment, and Korea is no different.  This is particularly true in the pharmaceutical industry, which is a passive industry that runs on status quo unless it’s shaken up by major reforms of regulation and laws.  These same regulation and laws provide high entry barriers and high margins, so it is essential to have a good appreciation of the situation – past, present and future.

Let me elaborate on the Japanese parallel.  Until the mid-1970s, the Japanese pharmaceutical industry was mainly driven by wholesale and imports.  In an effort to drive innovation, the Japanese government started to enforce substance patents in 1976.  After years of increased R&D spend and consolidation, the pharmaceutical world witnessed the dramatic rise of global players like Takeda, Astellas and Daiichi-Sankyo.  Then the industry peaked through the late 1990s and early 2000s, just as key governments in developed markets started to favor generic drugs.  Without firm, regulatory guidance and ability to adjust to global market conditions, the Japanese pharmaceutical sector stagnated.

In comparison, the Korean pharmaceutical market was strengthened with its own recognition of substance patents in 1986, followed by the government’s commitment to incubate a biotech industry in 1994.  So where is Korean healthcare headed?  No one knows for sure.  But what I do know is that regulatory/legislative change will continue to be an essential driver for growth (or lack thereof).

Two other quick observations: (i) relationships take longer to forge given the more social nature of our culture, but once formed, the bond becomes that much stronger and (ii) contrary to conventional wisdom, I think Koreans embrace change and are forward thinking.

Korean executives are becoming savvy dealmakers and that means useful strategic dialogues can take place.  I would encourage the global/local investor community to maintain dialogue with established companies and smaller, innovation champions alike.  Longer term, I think Korean firms will start turning to large investments and transformative M&A opportunities as a means to adapt in a lower-growth, developed market environment.

Interested in sharing your views by participating in an interview? Contact us at rgeesman@kotra.or.kr

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Top 5 Korean Deals: Domestic players big in 2011

This table features information on the 5 largest M&A deals in 2011. Most of the big deals from last year were between domestic parties, with the exception of  Korea National Oil Corporation’s acquisition of a 23.67 percent stake in Anadarko Petroleum Corp. in March. There have been many energy deals recently featuring combinations of public and private entities such as  the KNOC and Korean banks as the global contest to secure energy supplies intensifies.

Heat Table: Expect activity in industrial and chemical sectors

The Heat Chart uses media reports, company statements and proprietary intelligence gathered by mergermarket’s reporters to predict what areas will likely to be most active going ahead.  According to mergermarket’s numbers, 2011  M&As in the industrial and chemical sectors made up 31.4 percent by volume of all deals.  This Heat Chart shows this trend will continue, with 140 M&As forecast in the months to come. After industrial and chemical, mergermarket predicts the most action will be coming from Korea’s technology sector, with 76 M&As. Consumer, Business and Financial Services and the Pharma, Medical & Biotech industries are also expected to generate deals.

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Reasons given for the strong performance include Korea’s strong domestic economy, sturdy economic fundamentals and increases in investments from Europe, Japan, and the US. Investments from Europe increased 57.4% to $5.03 billion, investments originating in the US jumped 20.2% to $2.37 billion. Investment from Japan gained 9.6% to $2.28 billion.

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Asia Gyeongjae is reporting that Google and the Korea Communications Commission have signed an MOU in which the tech giant will  help to incubate Korean start-ups. According to the article, the agreement also includes provisions for Google to invest $1 million into a venture fund run by KCC’s Korea Internet & Security Agency.

At a signing ceremony at the KCC’s headquarters in Seoul, Google’s DJ Collins stated that Korea is the first country that Google has stepped up to promote venture companies. He went on to say that Google wishes to maintain a partnership with Korea into the future and help Korean developers make progress on the global stage.

Here is a good English-language article on the agreement by the Times of India.

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The workshop will kick off with an opening speech from  Invest KOREA Commissioner, Hank Ahn, who will briefly outline the role and goals of the organization. Then, an official from the Ministry of Knowledge Economy will give a presentation explaining the Ministry’s strategy to support Korea’s New Growth Engines and introducing the nation’s investment environment. After, five investment-seeking companies from Korea’s high-performing IT, software, and cleantech industries will talk about their exciting new technologies and business models. Lastly, co-investment opportunities for global private equity and venture capital investors will be introduced in an informational overview of the KoFC-backed Global Win-Win Fund.

In the afternoon, after the workshop, investors will have the opportunity to conduct 1:1 meetings with Korean companies at our “AFF Deal Flow” event. Currently 3 listed and 5 unlisted companies are confirmed to attend.

Please contact us at rgeesman@kotra.or.kr or jiunpark@kotra.or.kr for more information.

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The Korean government seeks to create a business cluster of financial investors by inviting global venture capital and private equity investors to establish an office at the Invest Korea Plaza (IKP) in southern Seoul.

Along with having full business facilities on hand, the IKP’s location next to the Korea Trade-Investment Promotion Agency (KOTRA) headquarters provides investors the access to industry experts, seminars and events, along with the deal sourcing services of Invest Korea’s Finance Industry Investment Promotion Team.

Ever since it’s opening in 2006, the IKP has made it much easier for foreign investment companies to establish themselves in Korea.  This business incubation complex is a one-stop solution to satisfy all of the needs of an expanding enterprise.

Exclusive, furnished offices for qualified foreign investors are immediately available for short and long-term lease. Once a business entity has applied online and has been selected as a tenant, they are appointed a Project Manager that will provide individualized support from the initial stage of investment to the actual set-up of their office in Korea.

Since IKP was designed with the sole intent to facilitate a comfortable and efficient transition for foreign investors into the Korean business world, it is equipped with many services and amenities to help make this possible. A lease contract at IKP includes: 24-hour building access, high-speed internet, and garage parking.  Some of the services provided are, but not limited to; telecommunication service, cleaning service, postal service, secretarial services in English or Japanese, and multilingual document services.

Furthermore, the Investor Support Center provides daily living services that help make adjustment to life in Korea as smooth as possible.  Their multilingual consultants are eager to assist foreign investors and their families by offering advice on, or answering questions about, living in Korea.

The consultants are able to provide information on Korean culture, education, healthcare, transportation, housing, tourism and more.  Tenants are even able to circumvent standard immigration procedures by obtaining their visas at the Investor Support Center.

The IKP building itself is comprised of 9 floors and contains conference rooms, seminar rooms, and a lecture hall.  Relaxation rooms, shower facilities, and business lounges are likewise available for tenant use.  The Plaza also houses a business support center with a bank, an accounting firm, and an FDI consulting firm.

In addition, KOTRA’s in-house Investment Consulting Team offers counsel for matters regarding accounting, finance, law, securities, and taxes. Offices of investment related agencies such as the Foreign Company Association (FORCA) and the Free Economic Zone Authority are also established in IKP.

As aforementioned, leases are immediately available for qualified businesses.  The duration of a long-term lease is one year and may be extended by another year if desired. Firms that are eligible for a long-term lease would be those that have registered spending of at least US$300,000 in FDI and expect to invest a minimum of U$1 million within one year.

Alternatively, a firm that expects to report an investment of at least U$300,000 within 6 months after moving in to IKP would also be eligible for a long-term lease. Short-term leases last for a fixed term of one year, with no option of renewal, and require no monthly payments.

To qualify for a short-term lease, a firm must have either a recommendation from KOTRA or KBC, or must plan on a short stay for the purpose of gathering information regarding manufacturing or a knowledge-based industry. Additionally, the selection committee will give certain businesses priority over others.  Preference is given to businesses that are subject to tax reduction as well as firms that are involved in:

• Global Venture Capital
• Private Equity
• High technology
• Manufacturing

To access further details about IKP and the online application to rent, please visit www.ikp.or.kr or email ikp@kotra.or.kr.

Story by Stephanie Lim

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