Korea Asset Management Corporation (KAMCO) has begun selecting delegated management companies (GPs) for the corporate restructuring innovation fund to support key industries, including petrochemicals, steel, and secondary batteries, which are expected to be heavily impacted by U.S. tariffs. To promote fund investment, KAMCO has decided to pay additional compensation of up to 30 percentage points of excess profits in addition to existing performance-based fees.
According to the financial sector on the 8th, KAMCO will select four operators for the sixth corporate restructuring innovation fund by Oct. 24 to support key industries at risk from U.S. tariff damages and companies undergoing restructuring.
This fund was originally a policy fund aimed at attracting private funds to invest in restructuring corporations, but the sixth fund will now also provide support to key industries that need proactive assistance. The key industries are six sectors, including petrochemicals, semiconductors, automobiles, displays, steel, and secondary batteries, which are at risk from U.S. tariff damages.
The fund structure involves KAMCO selecting the manager and investing funds, while the manager invests this money along with additional private funds into corporations. Initially, the plan was to establish a fund with a scale of 500 billion won, but it has now been expanded to 1 trillion won to broaden support for key industries.
The sixth fund will establish a dedicated blind fund for key industries with a minimum investment of 250 billion won, ensuring that more than 60% of the total fund amount goes to key industries. A minimum of 375 billion won of project fund investment resources will be fully allocated to key industries.
To boost investment in this fund, KAMCO has decided to strengthen fees paid to management companies. In addition to the existing performance-based fees, when the benchmark rate of return (6%) is exceeded, up to 30 percentage points of additional performance fees will be paid from excess profits that exceed the benchmark rate. If the revenue is shared between the management company and investors prior to the fee being paid, and if they choose to catch up, the benchmark rate is set at 8%.
Financial authorities anticipate that the establishment of the sixth corporate restructuring innovation fund will stimulate interest from private investors and the market in key industries and enable timely responses to restructuring needs.