Kim & Chang provided legal advice to VIG Partners, a private equity firm, in connection with the formation of the VIG Alternative Credit I Fund (hereby referred to as the “Fund”), which invests in real estate-related credit instruments (private equity loans).
As a result of the amendment to the Financial Investment Services and Capital Markets Act of Korea (the “FSCMA”) which became effective in 2021, the expanded scope of investment targets enabled investment in credit instruments in Special Situations (“SS”). In light of the recent flurry of activities and growing interest in the credit fund market, VIG Partners aimed to reduce its focus on existing buyout M&A activities, and expand its workforce for credit investment and establish credit funds to keep up with this trend.
Our firm advised VIG Partners on all aspects of the fund formation including (i) preparation of the articles of incorporation for the Fund and the investment agreement, (ii) negotiation of the terms and conditions with limited partners and (iii) various other tasks relating to the establishment of the fund and a special-purpose company, including filing regulatory reports. As there were no precedent cases of the establishment of an institutional private fund for investment in credit instruments in Korea, our firm engaged in extensive review of relevant overseas precedent cases as well as precedents involving general private funds in the course of preparing the Fund’s constitutional documents and analyzed relevant legal and regulatory issues.
The Fund was successfully established and is currently engaging in investment activities. Accordingly, VIG Partners won the “Best PEF Fund Raising Leader Award” at the 19th Korea IB Awards. The establishment of the Fund is significant in that it represents the beginning of a general trend of establishing institutional private funds with diversified investment strategies in line with the amended FSCMA