The Public Growth Fund will take on the role of patient long-term capital that supports the "scale-up" of advanced industry corporations rather than short-term gains. The plan is to supply long-term funds to corporations that have technology but lack the funding needed for mass production and research and development (R&D), and to build a virtuous investment ecosystem that continues from pre-IPO to post-listing.
Cho In-young, Director General at Timefolio Asset Management, said at "KOSDAQ CONNECT 2026," held at the Korea Exchange (KRX) conference hall in Yeouido, Seoul, on the 2nd, "The Public Growth Fund was set up to correct inefficiencies in the capital market and steer capital into productive areas," adding, "Over the long term, it will supply funds to strategic advanced industries and help reshape the KOSDAQ market's structure."
The citizen-participation Public Growth Fund is a policy fund that invests with a focus on strategic advanced industries. More than 60% of its asset under management must be invested in strategic advanced industry corporations, and at least 30% of that must be invested as new funding in unlisted companies and KOSDAQ technology-special listing companies.
Director General Cho explained, "The reason investment must be made with new funding is because the fund's nature is to supply patient long-term capital to the capital market," adding, "It is designed so that money actually goes into corporations."
The investment scope is not confined simply to AI, semiconductors, and other advanced corporations. Centered on the 12 strategic advanced industries designated by the government, it targets not only those corporations but the entire industrial ecosystem. Companies that supply equipment to AI corporations, data centers, infrastructure corporations such as power and water, and corporations that support research and development (R&D) are also included.
Director General Cho said, "One thing that is really certain is that the government continues to pour big money into advanced industries," adding, "If we invest preemptively in strategic advanced industries, I am confident we can achieve excess returns."
Timefolio Asset Management has selected AI and semiconductors, robots and automation, biotech, and aerospace and defense as the four megatrends and plans to run the Public Growth Fund in the form of a KOSDAQ venture fund. If the KOSDAQ venture fund meets the required share of venture investments, it can receive a priority allocation of 30% of KOSDAQ IPO shares.
Director General Cho assessed that despite the recent slowdown in the initial public offering (IPO) market, medium- to long-term investment opportunities remain intact. In the first half of this year, there were 17 new listings on the KOSPI and KOSDAQ, less than half of last year's, but subscription competition ratios and investor deposits increased instead, he said. "As the exchange tightens reviews, efforts to select good corporations are continuing," he said, adding, "Corporations preparing to list will continue in the second half as well."
He also presented the KOSDAQ market's relative undervaluation as an investment opportunity. Director General Cho said, "The 12-month relative return gap of KOSDAQ versus KOSPI is at a record high," adding, "If earnings growth in government-led industries continues, KOSDAQ is expected to move partly to close the gap."
He cited the supply of patient long-term capital as the biggest change the Public Growth Fund will bring.
Director General Cho said, "Many companies with strong technology face the 'valley of death' because they lack the money needed for large-scale mass production or research and development," adding, "By supplying patient long-term capital and waiting, we can help these companies deliver results."
He added, "From the pre-IPO stage to listing and post-listing mezzanine issuance, we can build a virtuous cycle that provides tailored funding across the entire corporate life cycle," and "If funds flow across the value chain of AI, semiconductors, and biotech and translate into real sales and profit growth, the KOSDAQ market can level up to a fundamentals-based stage."