The Financial Services Commission will launch the second public participation growth fund in the third quarter with a size of 600 billion won.
According to financial authorities on the 14th, Chairperson Lee Eog-weon of the Financial Services Commission said at the "Public Participation Growth Fund managers roundtable" held at the Korea Financial Investment Association in Yeouido, Seoul, on the 12th, "To meet public demand and contribute to a great economic leap through productive finance, we will launch the second fund."
The first fund, conducted earlier, sold out in five days. Investment management will begin on the 15th.
Fiscal resources, the same as the first round, will contribute 120 billion won as junior equity. Of the 150 billion won budget for the direct investment institutional sector, 40 billion won will be used, and of the 400 billion won budget for the infrastructure investment institutional sector, 80 billion won will be used. The fiscal mother fund manager and the public offering fund manager will remain the same as in the first round, but the sub-fund managers, who handle the actual investment management, will be newly selected. For sales-related matters such as allocating tranches to ordinary people and the share of online sales, improvements will be made by gathering opinions from banks and securities firms based on the first fund's sales performance.
At the roundtable, measures to strengthen managers' accountability and incentives to raise returns were also discussed. Earlier, President Lee Jae-myung also ordered at a Cabinet meeting in May that measures be prepared to boost the returns of participating managers.
Currently, sub-fund managers must contribute at least 1% of the committed amount as junior equity. If the fund's cumulative return exceeds 30% over five years, the manager will receive 12% of the excess return as performance fees. If they each achieve at least 40% for new capital investments in unlisted companies and KOSDAQ tech exception-listed companies, and for investment in non-capital regions, the performance fee increases to 16–20%.
To boost returns, sub-funds are allowed autonomous investments of up to 40%, and KOSDAQ venture funds can also be used. Management performance will be checked through monthly and quarterly reports.
The Financial Services Commission will have Korea Growth Investment Corporation (K-Growth) select outstanding managers every year and prepare additional incentives, such as giving them preference when participating in follow-on funds and policy funds.
At the same time, it decided to foster a competitive environment by requiring disclosure in asset management reports not only of public fund returns and sub-fund investment details (top 10 holdings and investment ratios) but also of returns by sub-fund. It also plans to review the incentive systems for key investment personnel when selecting sub-funds.
Chairperson Lee said, "Managers must properly manage the public's assets and return them with good results," and added, "Do your utmost to generate the best returns by leveraging your know-how and foresight."