KOSDAQ Market Boom... Liquidation Funds Yield 9.1%, 'All-Time High'

Ministry of SMEs and Startups Announces Analysis Results of Venture Fund Liquidations Over the Past 10 Years

Asia Economy DB

[Asia Economy Reporter Kim Bo-kyung] It has been revealed that the liquidation venture fund yield recorded an all-time high (9.1%) due to the boom in the KOSDAQ market at the end of last year.

The Ministry of SMEs and Startups announced on the 16th that an analysis of liquidation venture funds over the past 10 years showed that funds liquidated in 2020 had the highest returns. A liquidation fund refers to a fund that has achieved its investment objectives through investment and recovery since its initial formation or has been dissolved due to the expiration of its duration.

Returns have risen every year since 2016... 9.1% last year

Over the past 10 years, a total of 423 liquidation funds (110 management companies) were recorded, with an average return multiple of about 1.3 times. This means that if a venture investment association raised 10 billion KRW, it generated 13 billion KRW in returns.

Looking at the trend of liquidation fund returns, returns fluctuated before 2015. However, since 2016, returns have increased every year, reaching an all-time high of 9.1% last year.

Annual Return Trends of Liquidation Funds Over the Past 10 Years

As the number of KOSDAQ IPO companies increases, returns also rise

It was found that the more KOSDAQ initial public offering (IPO) companies among the companies invested in by liquidation funds, the higher the returns. Last year, when liquidation fund returns were at their peak, the number of KOSDAQ IPO companies among the invested companies (93) also reached its highest level.

An official from the Ministry of SMEs and Startups said, "There was a correlation between returns and the number of IPO companies among invested companies," adding, "As the KOSDAQ market becomes more active and the number of listed companies increases, the investment returns of funds also rise."

High returns in Bio/Medical, ICT Services, and Gaming sectors

Over the past five years, the sectors with high return multiples among liquidation funds were bio/medical, information and communication technology (ICT) services, and gaming. These sectors have emerged as new growth industries in the era of the 4th Industrial Revolution and the non-face-to-face era.

The bio/medical sector ranked within the top three in return multiples among all sectors every year over the past 10 years.

The ICT services sector has risen as a high return multiple sector since 2017. Last year, it ranked first among liquidation fund sectors in return multiples. The gaming sector showed high returns, ranking first three times in the past five years.

Top 10 management companies' liquidation profits reach 1.2 trillion KRW

In the past five years, 99 management companies (venture capitals) have had experience liquidating at least one fund. Among them, the top 10 management companies in terms of liquidation fund profit accounted for more than 71% of total profits, amounting to 1.211 trillion KRW. The top 10 management companies led the overall liquidation profits.

The management company with the highest fund profit was 'Stonebridge Ventures,' which recorded liquidation profits of 204.3 billion KRW.

Among the 253 funds liquidated in the past five years, the top 10 funds' liquidation profits totaled 806.9 billion KRW, accounting for about 47.5% of total liquidation profits.

Park Yong-soon, Director of Venture Innovation Policy at the Ministry of SMEs and Startups, said, "Through this analysis of liquidation funds, we were able to confirm the profitability of venture investments," adding, "We confirmed that the activation of the KOSDAQ market is correlated with venture investment returns, highlighting the important role of the stock market."

He added, "We plan to examine whether there are any areas to improve in the secondary recovery market and fields related to listing so that venture funds and venture investments can form a virtuous cycle structure leading from recovery to reinvestment."

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