Korea Investment & Securities Co. will invest a combined $40 million in Asia buyout funds run by U.S.-based private equity firms Carlyle Group and TPG Capital.

According to the investment banking industry on Wednesday, the company will put up $25 million and $15 million each in Asia buyout funds readied by Carlyle Group and TPG Capital.

Local commercial banks have often been involved as syndicate investors in multinational funds, but Korea Investment will be the first among domestic brokerage houses to pose as a limited partner in offshore funds.

Limited partners refer to institutional players who commit their capital to funds managed by private equity firms.

Carlyle is aiming to raise $5 billion for its fifth Asia buyout fund. Korea Investment plans to invest $25 million in the fund, hoping to add revenue through returns from mergers and acquisitions in the region. KB Kookmin Bank is said to be mulling similar investment in the same fund. Carlyle reportedly has already raised $4 billion.

The U.S. private equity titan with $170 billion of assets under management recently gained attention in Korea when it appointed Korean-American Kewsong Lee as its co-chief executive. In 2014, the firm acquired ADT Caps, a Korean security systems company, for 2.1 trillion won ($1.89 billion) and is seeking to resell the company.

Apart from Korea Investment, commercial banks including Woori, Shinhan and KB are considering investment in the seventh Asia buyout fund TPG is putting together.

The private equity fund market focused on the Asia-Pacific region is estimated to be worth over 50 trillion won ($44.9 billion) as more M&A opportunities are expected to crop up in the rapidly growing market.

When considering the scale of co-investments, as much as 100 trillion won of unspent capital is estimated to be floating in the regional M&A market.

“Global private equity funds find the relative high returns of the Asian market appealing amid the low interest rate environment worldwide,” said an investment banking official.

By Kang Doo-soon and Kim Hyo-jin

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