The Business Development Company (BDC) to boost the supply of venture capital will be listed on the KOSDAQ market, not the main bourse. Because its primary investments are in unlisted shares, the fund's maturity will be set at five years or longer, and to prevent the fund from becoming too small, the minimum subscription amount is set at 30 billion won.
The Financial Services Commission said on the 5th that it will revise subordinate regulations under the Financial Investment Services and Capital Markets Act to introduce BDCs. A BDC is a public fund that allows individual investors to invest directly in unlisted venture corporations in the stock market. The main target corporations are unlisted venture and innovative corporations, venture partnerships, and companies listed on KONEX and KOSDAQ, and at least 60% of the fund's total asset value must be invested in these.
However, investments in venture partnerships and KOSDAQ-listed companies (market cap of 200 billion won or less) will each be recognized only up to 30% when calculating the minimum investment ratio, to prevent concentration in specific sectors. Investments will be made through the purchase of securities or by monetary lending. Because venture capital carries relatively higher risk, a range of investor protection measures has been put in place.
Given that the fund mainly invests in unlisted shares, the maturity is set at five years or longer, and to prevent the fund from being downsized, the minimum subscription amount is set at 30 billion won. To strengthen the responsibility of the manager, a certain amount will be committed as "seeding investment" (the manager puts up part of the initial capital) depending on the subscription amount, and the fund equity must also be held for a certain period.
BDC securities will be listed on the KOSDAQ market, reflecting that the main target corporations are venture and innovative corporations. It has been more than 20 years since a fund was listed on the KOSDAQ market. When an unlisted corporation that received BDC investment undergoes a technology evaluation for special technology listing on the KOSDAQ market, it will receive extra points. The aim is to create a virtuous cycle in which a corporation that received BDC investment lists on the KOSDAQ market, grows, and then distributes that revenue to investors through the BDC.
Also, considering that unlisted shares have low liquidity, if the manager violates operating ratio regulations due to unavoidable reasons such as price fluctuations in target assets or partitioning and mergers, application of the regulations will be deferred for one year by default. The regulations take effect on the 17th. The 42 existing comprehensive asset managers will be deemed to have been licensed for BDC management as of the effective date.