This article was displayed on the ChosunBiz MoneyMove (MM) site at 3:58 p.m. on Feb. 19, 2026.
As the Public Growth Fund, a 150 trillion won mega policy finance project, goes into full operation, private equity fund (PEF) managers and the venture capital (VC) industry are focusing their attention. Expectations are high for an unprecedented, trillion-won-scale policy-backed commitment market, but at the same time a sense of crisis is mounting. With large-scale fundraisings proceeding simultaneously and strict formation conditions, there is concern that raising private capital will not be easy.
According to the investment banking (IB) industry on the 19th, Korea Development Bank (KDB) recently began the process of selecting general partners (GPs) to manage the fiscal parent fund for indirect investments under the Public Growth Fund. The bank plans to choose the parent-fund managers as early as early March and then carry out the first commitment program. The notice said this year's indirect investment mandate totals 7.45 trillion won, with 3 trillion won in policy funds and about 4.4 trillion won raised through private matching.
The Public Growth Fund is a 150 trillion won mega policy fund established by the government. 50 trillion won will be used for low-interest loans (loan type), 50 trillion won for infrastructure investment, and the remaining 50 trillion won for equity investment (equity type). Of this, about 15 trillion won is planned for direct investments in corporations by KDB, and about 35 trillion won will be managed by private operators such as PEFs and VCs in the form of indirect investments (delegated management).
The industry is watching the 35 trillion won in indirect investment funds. KDB plans to commit about 7.5 trillion won of that to an "advanced industry fund," with the remaining 27.5 trillion won raised through private matching. Given that the Public Growth Fund will run for the next five years, cumulative investment could outgrow the National Pension Service, further lifting industry expectations.
However, the PEF and VC industries expect it will be difficult to secure private limited partners (LPs) as large fundraisings proceed simultaneously. With high interest rates and economic uncertainty keeping private capital conservative, there are concerns that a flood of policy funds could trigger a string of failed fund formations. If managers fail to complete private matching within the set deadline and the fund does not form, they could face penalties in future commitment programs, adding to their burden.
There are also worries that a "the rich get richer, the poor get poorer" effect could reemerge. Even if incentives are expanded to attract private money—such as subordinated enhancements using government finances—large managers with deep LP pools, including mutual aid associations, pension funds, and financial institutions, are expected to have an advantage in contests. Large managers have already stepped up outreach to LPs since the second half of last year, going all out to attract capital.
The "ultra-long-term technology investment fund" introduced in this commitment program is cited as another headache for managers. Its maturity can be set up to 20 years, far beyond the usual 10-year fund life. The prevailing view is that the longer the management period, the more asset liquidity is tied up and the less certain the exit timing becomes, making private LPs reluctant to commit capital.
An industry official said, "Most LPs feel burdened even about extending an eight-year fund by one year, so it is questionable how many institutions will put money into a 20-year fund," adding, "Given the tight schedule to select managers in the first half and complete sub-fund formations within the year, failure to secure private LPs in advance makes a failed formation highly likely."