"Our first focus in South Korea is the public companies because their valuation is listed," Ta-lin Hsu told Reuters in an interview. "Private Korean companies are in denial mode."

Differences of opinion over the valuation of Korean companies have emerged as a stumbling block in the country's drive to attract foreign investment, said Hsu, who was among the speakers at a conference in Seoul on private equity investment.

A common complaint among potential foreign investors is that Korean companies are clinging to pre-crisis prices.

A currency crisis forced South Korea late last year to accept a $58.35-billion bailout arranged by the International Monetary Fund, which is overseeing broad reforms of the country's outdated financial and corporate sectors.

The Korean won has recoveredin recent months but is still down about 30 per cent against the dollar from a year ago.

Hsu said repeated calls by South Korean president Kim Dae-jung to welcome and seek out foreign investment had succeeded in softening Korea's traditionally anti-foreign attitudes.

"It's always going to be a struggle, but the main thing is that the guy at the very top has declared that bringing in foreign capital is the key to restructuring," Hsu said.

"That sets the stage," he said.

The government's push for corporate consolidation through so-called big deals or business swaps among South Korea's big conglomerates was worrisome, Hsu said.

"I certainly hope Korea will gradually migrate to a freer economy where something like consolidation is market driven," he said.

H&Q Asia on Tuesday sealed a deal to take a controlling stake in Ssangyong Investment and Securities in the first foreign takeover of a South Korean securities house.

Ssangyong, South Korea's fifth largest brokerage, transferred its shares andtitle to H&Q Asia Pacific on Tuesday, and a capital injection and rights issue offering would take place in about mid-December, Hsu said.

H&Q was bringing $80 million to $100 million to the deal plus commitments from major international investors, he said.

Ssangyong Group earlier said it had agreed to sell its 28.11 per cent stake in the securities firm to H&Q.

H&Q Asia, a unit of US-based investment bank Hambrecht & Quist Group Inc, would invest in Korea on a "selective basis" and would be looking at future investments in South Korea's manufacturing and technology sectors, he said.

"By nature, we're opportunistic but also optimistic," Hsu said.

"We manage money for large institutions like pension funds and insurance companies. We're looking for the highest possible return, but we're not here to buy and sell stocks."

South Korea and Thailand were H&Q's preferred Asian investment targets because of their success so far in implementing economic restructuring programmes, he said.