Korea's securities industry plans to inject large sums into the venture secondary market to breathe warmth into the sluggish venture investment ecosystem.
The Korea Financial Investment Association said on the 31st that, joining hands with domestic securities firms, it plans to carry out venture secondary investments totaling about 1 trillion won over the next three years.
The secondary market, where existing investors sell their holdings to other investors, has long been criticized for a weak capital recovery function. In response, voices within the financial investment industry have steadily noted that to normalize a virtuous cycle of risk capital linking "investment-growth-recovery-reinvestment," it is urgent to shore up the recovery market.
Through this plan, the industry intends to inject a total of 1 trillion won into the venture recovery market. Investments will proceed on a two-track basis: an "individual investment" method that leverages each securities firm's dedicated capabilities and a "joint fund" method that pools large-scale capital.
Individual investments will be executed at about 618.5 billion won, centered on seven mega investment banks that operate issuance bills and integrated investment accounts (IMA)—Mirae Asset, Shinhan Investment, NH Investment, KB, Kiwoom, Hana, and Korea Investment & Securities Co. If a comprehensive financial investment business operator that newly acquires an issuance bill license joins later, the investment amount is expected to increase to the 700 billion won range.
The joint fund to be created alongside is expected to launch at 300 billion won, led by the Korea Financial Investment Association and the 15 securities firms with the highest operating profit last year (Kyobo, Daishin, Meritz, Mirae Asset, Samsung, Shinyoung, Shinhan Investment, NH Investment, Yuanta, KB, Kiwoom, Toss, Hana, Korea Investment, Hanwha Investment & Securities).
The industry expects the fund to serve as priming water that both supplies stable capital to the venture recovery market and promotes private-led secondary investments.
The Korea Financial Investment Association plans to begin investing after issuing a call for management institutions, selecting a final manager, and completing capital commitment agreements.
Related securities institutions are also preparing separate support measures of up to 1 trillion won. Including this, funds flowing into the venture recovery market across the financial investment industry are estimated to reach around 2 trillion won.
Hwang Seong-yeop, head of the Korea Financial Investment Association, said, "This plan is meaningful in that the securities industry is actively participating in building a growth ecosystem for venture and innovative companies," adding, "We will continue efforts to revitalize the venture recovery market and expand the supply of risk capital."