Government Launches '2 Trillion+@' Asset Purchase Program Led by KAMCO

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Economy and Finance, is delivering opening remarks at the 6th Emergency Economic Central Countermeasures Headquarters meeting held at the Government Seoul Office in Jongno-gu, Seoul on the 11th. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Kim Hyo-jin] The government has decided to launch an asset purchase program worth "KRW 2 trillion +@" centered on Korea Asset Management Corporation (KAMCO).

The Financial Services Commission announced on the 11th that it approved this plan at the 6th Emergency Economic Central Countermeasure Headquarters meeting chaired by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki.

This program will be promoted with a scale of more than KRW 2 trillion through the issuance of KAMCO bonds.

To this end, the government plans to reflect a cash injection of KRW 50 billion in the 3rd supplementary budget bill to secure KAMCO's support capacity.

Additionally, the government will incorporate the rise in debt ratio due to additional issuance of KAMCO bonds into the mid- to long-term financial management plan and consider in-kind contributions to ensure stable issuance of KAMCO bonds and maintain an appropriate debt ratio.

Furthermore, the government plans to secure additional support capacity by reinvesting recovered funds through differentiated investment periods according to asset characteristics. Assets involving private participation will be operated short-term, while those purchased solely by KAMCO will be managed mid- to long-term.

The support targets include large corporations as well as small and medium-sized enterprises (SMEs) and mid-sized companies. The primary purpose is to select support targets to complement market failure areas where asset sales markets are difficult to form.

For large corporations, priority support will be given to companies with financial structure improvements, those requesting creditor group support, and those with significant self-help efforts and proactive funding needs. SMEs and mid-sized companies will be broadly supported according to individual demands.

The government will establish pricing standards based on asset types and purchase methods by utilizing external professional institutions such as accounting firms to ensure objective and balanced pricing. This will comprehensively consider appraisal values, average bid rates, and opinions of selling companies.

Considering the characteristics of purchased assets and corporate demand, the government will operate various acquisition strategies by determining purchase methods, investment periods, and management methods.

The government also plans to establish a platform where KAMCO can collaborate with private capital.

Accordingly, a cooperative system will be built with the Corporate Restructuring Innovation Fund and creditor groups that play a catalytic role in the corporate restructuring market. Information sharing and joint investments will be sought with KAMCO, the Corporate Restructuring Innovation Fund, creditor groups, private equity funds, pension funds, and others.

Moreover, the Corporate Restructuring Innovation Center operated by KAMCO will be utilized as an information-sharing and matching support platform between demanders and suppliers of corporate assets.

The idea is to form a "Corporate Restructuring Marketplace" that gathers information on companies and capital market investors to support companies in attracting investment and investors in discovering investment opportunities.

The government plans to conduct a preliminary market demand survey within this month and prepare detailed programs.

Subject to the National Assembly's approval of the 3rd supplementary budget bill, the goal is to start accepting asset purchase applications and launch the program next month. Even if the passage of the supplementary budget is delayed, KAMCO bonds will be issued first to proceed with asset purchases.

If asset sale demand exceeds KRW 2 trillion, the government will consider expanding the scale or sharing roles with the Industrial Stabilization Fund.

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