Starting on the 24th, The Export-Import Bank of Korea (KEXIM) will be able to acquire more than 15% of voting shares in venture companies and small and midsize enterprises. Indirect investments in venture investment funds and new technology investment funds will also become possible.
On the 16th, the government reviewed and approved a revision to the enforcement decree of the The Export-Import Bank of Korea Act at a Cabinet meeting. The aim is to broaden KEXIM's policy finance role from loans and guarantees to "investment" by easing limits on direct and indirect investments.
Under the current enforcement decree, KEXIM's acquisition of voting shares in direct investments is in principle limited to within 15%. This time, however, the 15% cap will not apply to venture companies and small and midsize enterprises.
Specific requirements to ensure "adequate profitability" in direct investments were also set. For KEXIM to proceed with a direct investment, the expected return on the target project must be at or above KEXIM's benchmark return. For equity investments in overseas construction projects, the return requirement must be met, and there must be at least one year within five years after project completion in which the net cash flow is greater than 0.
The scope of indirect investments will also expand. Previously, investments focused on collective investment schemes under the Financial Investment Services and Capital Markets Act, but going forward, KEXIM will be able to invest in venture investment funds under the Venture Investment Act and new technology business investment funds under the Specialized Credit Finance Business Act. The cap on KEXIM's investment amount, which had been limited to 25% of the collective investment property for each investment vehicle, will also be abolished.