1 Trillion Won Scale '2nd Corporate Restructuring Innovation Fund' Investment Launch

Financial Services Commission "Expecting Revitalization of Private-Led Restructuring Market"

[Asia Economy Reporter Eunmo Koo] The second Corporate Restructuring Innovation Fund, established to revitalize the private sector-led corporate restructuring market, has begun investing.

On the 14th, the Financial Services Commission announced that the second Corporate Restructuring Innovation Fund, which will be raised to a scale exceeding approximately 1 trillion won within the year, has started its investments. The financial authorities plan to further strengthen the leading role of private sector-centered restructuring through the establishment of the second fund.

The second Corporate Restructuring Innovation Fund's mother fund was raised in May with a scale of 501.5 billion won, and it is expected to be raised to over 1 trillion won through private capital matching in the future. Among these, the blind fund, which collects funds first without specifying investment targets and then finds investment destinations, will have 300.9 billion won invested from the mother fund into five sub-funds. Private investors are currently being recruited, and the fund setup is expected to be completed within the year. Notably, the newly established "Debt Investment Dedicated Fund (PDF)" will see the mother fund investing about 50 billion won each in two management companies for the first time.

The mother fund also plans to invest 200.6 billion won in project funds, which raise funds after pre-selecting investment targets, and 50 billion won has already been confirmed for two corporate investments. Since private matching can exceed the mother fund's investment amount, the second fund, which has a mother fund raised at a scale of 500 billion won, can grow to over 1 trillion won.

The Corporate Restructuring Innovation Fund was first established in 2018 to efficiently carry out corporate restructuring by utilizing abundant private capital, expertise, and creativity, and to further enhance the competitiveness of the relevant industries. Until now, restructuring led mainly by creditor banks has achieved results in improving corporate financial structures to minimize market shocks, but there were limitations in fundamentally improving business structures to increase corporate value and secure competitiveness. The Corporate Restructuring Innovation Fund has contributed to developing management companies' restructuring capabilities by encouraging various management companies to enter the corporate restructuring market through investment risk mitigation, and has also created numerous successful investment cases.

The first Corporate Restructuring Innovation Fund, created in August 2018, raised sub-funds totaling about 1.7 trillion won by matching private capital, and subsequently invested approximately 981.9 billion won in 20 companies. Looking at the fund types, the blind fund had the mother fund invest 400 billion won in six sub-funds, matched with 622.8 billion won of private capital, raising a total of 1.0228 trillion won. This capital was invested with 248.6 billion won in 15 mid-sized and small companies including shipbuilding and petrochemical firms to support their business normalization.

For project funds, the mother fund invested 138.5 billion won in six sub-funds, matched with 594.8 billion won of private capital, raising a total of 733.3 billion won. This capital was invested in five mid-sized and small companies including construction heavy equipment and steel firms, contributing to enhancing corporate value and competitiveness.

The Financial Services Commission stated that in the future, when raising the second fund, it plans to introduce PDFs for rapid investment and expand the proportion of project funds to ensure that investments by the Corporate Restructuring Innovation Fund in companies are made swiftly. Additionally, it added that investment targets will continue to focus on mid-sized and small companies as before, while also expanding investments to large corporations.

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