To allow corporations to transfer innovative technology from public research institutes (public institutes) without burden, "technology asset securitization finance" is being promoted. Korea Technology Finance Corporation (KOTEC) is reviewing ways to reduce the burden of royalties that corporations pay for using the technology in this process.
According to the financial sector on the 23rd, Korea Technology Finance Corporation (KOTEC) is preparing specific operational plans to promote technology asset securitization finance. This is thanks to an amendment to the Asset-Backed Securitization Act, effective Jan. 2024, that expands the scope of securitizable assets from conventional bonds and real estate to "intellectual property rights to be generated in the future," among others.
Public research institutes funded by government grants generate revenue by transferring the innovative technology they have developed to corporations. For example, they sign a contract to transfer the technology and receive 1 billion won. However, corporations may be reluctant to pursue technology transfer because they would take a loss if the technology does not immediately increase sales.
The situation changes if intellectual property rights are included as a securitizable target. Asset-backed securities (ABS) are issued with the right (claim) to receive 1 billion won in the future as collateral. ABS refers to securities issued based on the cash flow (1 billion won) generated by the asset.
Pension funds and other institutions invest in the ABS issued in this way, and the investment funds are paid to the public institutes. In effect, the investment funds advance the 1 billion won that the corporations would pay. Corporations can reduce their burden by repaying the principal of 1 billion won and interest in installments after actual sales occur. The principal and interest paid by corporations become the revenue of ABS investors.
Korea Technology Finance Corporation (KOTEC) is reviewing a plan to provide guarantees so that institutions can invest in ABS. KOTEC already bundles multiple bonds issued by low-credit companies and provides guarantees. A KOTEC official said this is "a stage to explore future business," adding that "the role of KOTEC in the technology asset securitization process has not yet been decided."