Gwagigong and Post Office Insurance Launch 320 Billion KRW PEF and VC Investment Project

Gukigong '10 Locations' and Post Office Insurance '3 Locations' Selected as GPs
Private Capital Matching Commitment Letter (LOC) is Key

[Asia Economy Reporter Kwangho Lee] Amid a freeze in the investment market due to tightening liquidity, the Korea Technology Finance Corporation and Post Office Insurance are launching investment projects totaling KRW 320 billion. Attention is focused on whether the creation of new blind funds will bring relief to the industry.

According to the investment banking (IB) industry on the 29th, the Korea Technology Finance Corporation (hereinafter referred to as KOTEC) is conducting a blind fund investment project worth a total of KRW 240 billion. The targets are domestic private equity funds (PEF) and venture capital (VC). They plan to select a total of 10 general partners (GPs) across three sectors. Notably, the venture fund sector has newly established an early-stage startup investment category in this investment project.

In the PEF sector, four management firms will be selected. Each will receive investments ranging from KRW 30 billion to KRW 50 billion, totaling up to KRW 150 billion. After individual evaluations, rankings will be assigned to allocate investment amounts accordingly. The first place will receive KRW 50 billion, second place KRW 40 billion, and third and fourth places KRW 30 billion each. The minimum fund size that each management firm must establish is KRW 100 billion.

The venture fund sector is divided into general and early-stage categories. In the general venture fund category, four management firms will each receive KRW 20 billion in investment. For early-stage startups, two management firms will be selected and supported with KRW 5 billion each. These funds must invest at least 50% of the total committed amount in small and medium (venture) enterprises within three years of their establishment. The minimum fund size for individual funds is KRW 50 billion for general and KRW 20 billion for early-stage categories.

To submit an investment proposal, an investment commitment letter (LOC) must be obtained. At least 30% of the total committed amount must be secured. Additionally, if there are currently operating blind funds, more than 60% of the committed amount must have been utilized to qualify.

Post Office Insurance has also initiated an investment project worth KRW 80 billion. Post Office Insurance selected three management firms to entrust KRW 80 billion to venture capital. After document evaluation and on-site inspections of management firms, the final GPs will be selected in October.

Selected GPs must establish funds of at least KRW 100 billion. Furthermore, there must be at least three liquidated funds based on blind fund criteria. Other conditions include assets under management (AUM) of at least KRW 100 billion and prohibition of co-general partners (Co-GP). The investment period is four years, and the fund maturity is within eight years. The GP investment ratio is at least 1% of the fund size.

Previously, Post Office Insurance selected three entrusted firms in 2015 and invested a total of KRW 50 billion. In 2018, it also invested in overseas venture capital. At that time, Adams Street Partners was selected as the GP and invested up to USD 50 million. Last year, SV Investment, Mirae Asset Venture Investment, and LB Investment were selected as domestic venture capital entrusted management firms.

In a situation where securing major policy funds such as the Korea Fund of Funds and Korea Growth Investment Corporation is difficult, the news of these investment projects has attracted the attention of the investment industry. However, since an LOC is required, major management firms capable of stably matching private funds are expected to have an advantageous position.

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