Korea Development Bank Eases Fund Management Standards to Promote Venture Investment

Formation of LP Consultative Body with Growth Finance and Korea Venture Investment
Easing of Follow-up Investment Approval Procedures and Additional Capital Contribution Requirements
Allowing Untact Method for Investment Review Committee

[Asia Economy Reporter Kangwook Cho] The Korea Development Bank announced on the 7th that it held discussions on measures to promote venture investment by forming an LP (Limited Partners) council together with Korea Growth Investment Corporation and Korea Venture Investment Corp.

Following the COVID-19 pandemic, the three leading investment institutions in South Korea's venture investment market gathered in one place to restore the investment sentiment that had contracted.

Through this discussion, each institution agreed to ease the existing fund management standards that could hinder rapid venture investment. In particular, reflecting the opinions of private investors in the future, they plan to revise and finalize the fund management standard regulations through the general meetings of partners for each fund.

According to the proposed revision of the regulations discussed, the approval process for follow-on investments will be relaxed. Until now, when the same management company made additional investments in an already invested company, the management company had to hold a general meeting of partners and obtain a special resolution (approval by two-thirds or more of the investment units), which was a cumbersome procedure.

However, going forward, if there are no conflicts of interest such as consistency in resource allocation or the expiration of the investment period of the preceding investment fund, follow-on investments will be allowed without a general meeting of partners, significantly reducing the operational burden on the management company.

Additional investment requirements will also be eased. When a management company requests additional investment, the threshold for the exhaustion rate of previously invested funds will be relaxed from 70% to 60%, thereby advancing the timing of investment and encouraging an increase in the investment exhaustion rate.

Untact (contactless) investment review committees will also be permitted. If direct participation in the investment review committee is difficult, participation via written documents or video conferencing will be allowed, supporting rapid investment decisions through an untact decision-making process.

The council stated that this discussion is meaningful as major policy investors voluntarily collaborated to revitalize the venture ecosystem following the announcement of private venture investment promotion measures at the 4th Emergency Economic Meeting on April 8. The industry expects that cooperation among anchor investors who promote multiple investment projects will positively contribute to activating venture investment.

An LP council official said, "Recently, policy investment institutions have continuously listened to and actively reflected market difficulties, starting with the standardization of business report formats," adding, "We plan to steadily pursue institutional improvements through this council to strengthen cooperation among investment institutions so that management companies can focus on investment activities."

This content was produced with the assistance of AI translation services.