Financial Services Commission Launches Sub-Fund Recruitment for 1 Trillion Won Corporate Restructuring Fund

Actively Encouraging Investment in Small and Medium Enterprises and Corporate Rehabilitation

The Financial Services Commission announced on the 2nd that it will recruit asset management companies to establish sub-funds for the 4th Corporate Restructuring Innovation Fund, with a scale of 1 trillion won within this year. Since committing to establish a main fund worth 500 billion won last April, the FSC has begun the full-scale process for setting up sub-funds.

The Corporate Restructuring Innovation Fund is a policy fund that attracts private capital using policy funds as seed money to revitalize restructuring centered on the capital market, and invests this capital in restructuring companies. Since 2018, it has been established three times (1st to 3rd funds) with a total scale of 4.9 trillion won, investing about 3.8 trillion won in approximately 100 companies to date. It supplies liquidity to restructuring companies and fosters private restructuring asset managers and investors.

The 4th Corporate Restructuring Innovation Fund has been prepared to effectively support companies' recovery and continue market-centered restructuring in response to economic slowdown pressures such as interest rates and inflation. Korea Asset Management Corporation (KAMCO) will take on the role of managing the main fund. KAMCO plans to provide comprehensive support for the management normalization of investee companies by linking its own corporate support programs such as investment by the Corporate Restructuring Innovation Fund, asset sales followed by re-leasing, and funding support for rehabilitation and workout companies.

The FSC plans to expand the proportion of project fund resources to strengthen policy-oriented investment and accelerate execution speed. Project funds are funds that, once an investment target is identified, are raised through a single investment in the respective company and are immediately exhausted. This differs from blind funds, which are raised and managed by asset managers over an investment period of 5 to 7 years, diversifying investments across multiple companies. The FSC stated, “We will induce business restructuring support for manufacturing industries important in terms of industrial competitiveness, such as automobile parts and shipbuilding equipment.”

Furthermore, the FSC will strengthen investment inducement through the fund for small and medium-sized enterprises and companies that have initiated management procedures such as rehabilitation, workout, and voluntary agreements. It will increase the fees paid when investing in relatively difficult-to-invest SMEs and post-restructuring companies. Additionally, blind funds will be classified into medium and small sizes according to investment scale, and small funds will be guided to invest mainly in SMEs.

KAMCO will accept proposals for blind funds starting from the 23rd of this month and plans to complete the selection of asset managers by the end of June. Proposals for project funds will be accepted on an ongoing basis throughout the year. After selecting sub-fund asset managers for blind funds, a private capital matching process will be conducted centered on each asset manager, and investments are planned to commence within this year.

The FSC stated, “Through the Corporate Restructuring Innovation Fund, we will provide companies with opportunities for recovery or structural innovation by supporting new funds in the short term and continuously mature the domestic restructuring investment market in the mid to long term,” adding, “We will transition to market-centered restructuring that shares profits through corporate normalization.”

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