Structuring for the South Korea Market Wave: A Fund and Fiduciary Perspective

South Korea’s evolving markets, stalwart industrial sectors and burgeoning place as an AI stronghold make the country a natural fit for offshore fund and fiduciary structuring to take the Miracle on the Han to the next generation and beyond.

South Korea is a veritable generator of headlines and trends. The technicolour musical juggernaut that is K-pop has driven the country into an overall zeitgeist that has spilled over into Korean television series such as Squid Game and Culinary Class Wars dominating streaming service ratings and conversations among friends, to the piquant pepper paste gochujang winding up in recipes as diverse as fried chicken and chocolatey baked goods.

This exuberance has gone beyond Korean cultural diplomacy, or hallyu. The spice has hit South Korea’s financial sector and stock markets. South Korea’s KOSPI index gained more than 75% in 2025, its strongest year since 1999 and making it among the most ebullient stock markets globally over the year.  In mid-2026, the benchmark index experienced volatility on the back of concerns over tech stocks, with a 40% plummet from its June 2026 peak. The index has since rebounded somewhat, ending July down more than 21% for the month but still up more than 50% since the start of the year.

Much of this market wave comes on the back of rapid growth of AI and demand for semiconductor chips powering this technology. Beyond tech, the South Korean stock market has also gotten a bump from the HALO investment trend. “HALO”, which stands for “heavy assets, low obsolescence,” is a strategy for investors who would like to invest in stocks they consider impervious to the advent of AI. Among these sectors is heavy industry. South Korea long has had a solid, diverse base in terms of manufacturing and is traditionally quite capital heavy, with many of the related businesses held under family-owned conglomerates, or chaebols. Private equity funds have been looking for carve-out opportunities for those businesses as owners consider their succession plans. Startups and small-to-mid-cap businesses in South Korea have also been attractive targets for private equity firms.

Recent corporate governance reforms and developments in local commercial law have incorporated more investor-friendly positions. This has given a boost to the local market and in turn, driven international focus on the country. In all, South Korea is on trend as a prime destination for inbound international capital flows, as well as Korean domestic investors looking for structures to help bolster their portfolios, including offshore options such as funds domiciled in the Cayman Islands.

South Korea: Alternative asset management going global

In the global asset management sphere, South Korea historically had been overlooked given its relative size compared to China and Japan. South Korea’s rise as a technology powerhouse and steady economic growth amid recent geopolitical developments has garnered the country a place in the international investment conversation. Part of this trend is attributable to the growth of the local alternative investment sector, including in hedge funds and private equity funds. Local fund managers have been increasingly looking to broaden their investor base by setting up investment funds outside of Korea in jurisdictions such as the Cayman Islands, a leading jurisdiction for domiciling investment funds. Offshore investment funds set up by Korean private equity fund managers are typically structured using Cayman Islands exempted limited partnerships as parallel or feeder funds to their primary Korean funds, whilst Korean hedge fund managers prefer to set up corporate funds using Cayman Islands exempted companies.

South Korea: Reforms addressing the “Korea discount”

Corporate governance reforms have been a major factor in addressing the “Korea Discount” – the lower valuations attached to many of the Korean listed companies compared to global peers due to the complex chaebol ownership structures prevalent in the country.

Commentators note that the South Korean government’s 2024 Corporate Value-Up Program, which was aimed at boosting the valuation of listed companies and addressing their relative underperformance, has been a success to date and brought improvements to local corporate governance practice. Alongside recent amendments to the local commercial law augmenting directors’ fiduciary duties and minority shareholder protections, broader participation in the program from the corporate sector has been met with increased capital inflows from overseas. The Korea Value-Up index, launched by the Korea Exchange as part of an initiative to help institutional investors identify companies demonstrating strong governance, among other metrics, has risen by more than 130% since its inception in 2024. Efforts to stimulate dividend payouts through a reduction in dividend income tax from 45% to 14–30% have also been credited with releasing value to the market.

Fund and Fiduciary: Structuring considerations

With the domestic market rally and global attention on South Korea, there has been a significant increase in domestic private equity and hedge fund firms that have already established a track record with domestic won-denominated funds with Korean managers that are now looking to raise funds from investors outside of Korea.  With the Cayman Islands recommended as the jurisdiction of choice for efficient fund structuring and tax neutrality, the Maples Group is capable of providing a broad range of fund and fiduciary services for Korean managers looking to set up Cayman Islands funds. The Maples Group covers a wide breadth of services, from fund formation, administration and regulatory compliance to independent directorship and share trustee solutions catering for a variety of ownership and control structures.

Where a partnership structure is utilised for a fund, such fund may seek to ensure that its general partner (“GP”) is independent from the investment manager depending on the requirements of the home country of the investment manager and/or the fund’s investors and their respective corporate, legal and regulatory preferences.  It is vitally important that an independent director of the board of the GP understands the commercial business of the fund, and specifically what their fiduciary role and responsibility entail.  The independent director should also be well-versed with the applicable regulations of the fund jurisdictions in which the fund will operate to ensure regulatory compliance and appropriate fiduciary oversight.  Operationally there may be various activities that will need to be carried out independently of the investment manager and these matters should be well-defined from the outset.

In support of the GP being independent of the investment manager, the controlling share of the GP may also be held on trust.  The trust can be established as a charitable trust with a third-party trustee, such as the Maples Group, holding the legal title to the share with the beneficial title held on trust for charitable purposes.  The introduction of the share trustee may help address accounting, consolidation and other issues that could potentially otherwise arise if the investment manager were to hold the controlling share or equivalent themselves.

Each fund structure will present its own unique set of limitations and requirements, and appropriate legal and tax advice should be sought when considering such a fund structure.  Regard must also be had for the specific nature of the fund’s operations, the countries involved and the applicable tax treaties. The Maples Group has deep experience in connecting fund managers and investors by way of establishing and servicing complex structures tailored to benefit investor requirements, such as dedicated feeder structures as well as multiple Cayman Islands Special Purpose Vehicle arrangements.

The Maples difference: Services for South Korea

The Maples Group’s global presence and depth of experience in providing offshore fund and fiduciary services, including for independent GP fund structures, enable us to offer our clients a global and multi-service solution to meet their fund needs.  Our seasoned fund and fiduciary professionals have deep expertise in all facets of alternative investments, adding significant value through a true understanding of our clients’ requirements and needs.  Acting as independent directors to a broad range of funds with varied and complex investment structures, the Maples Group brings great comfort to stakeholders, ensuring the highest standards of governance and regulatory compliance are fulfilled.  Share trustee services provided by the Maples Group also assist with meeting the evolving needs of clients relating to corporate governance requirements and fund structuring.

Clients based in Korea looking to raise capital from overseas can benefit from the Maples Group’s all-around solutions, including fund formation and launch and related Cayman Islands legal advice, fund administration to open-ended investment funds and closed-ended private asset funds; FATCA, CRS and AML compliance, fund accounting, investor services and independent director and share trustee solutions tailored to operations and size. As part of this comprehensive service offering, Maples Fund Services provides a fast and hassle-free client bank account solution, reducing operational complexity, saving managers meaningful time and enabling a quicker path to market.

Firms partnering with the Maples Group benefit from our extensive in-house resources spanning fiduciary, fund services and legal services for an all-inclusive package that is bespoke to the clients. For the duration of the client / service provider relationship, there is a single point of contact, allowing for further ease of communication.

In conjunction with our robust institutional grade infrastructure and a reputation for outstanding client service, the Maples Group’s solutions for investment funds are unparalleled.  If you have any questions about independent GP funds or any other funds matter, please connect with one of the authors or your usual Maples contact.