Jungjingong Issues Scale-up Financing Worth 130 Billion KRW for 47 Companies

Public Offering Fully Issued with ESG Bonds
Activation of Socially Responsible Investment

The Small and Medium Business Corporation (Chairman Kim Hak-do, hereinafter referred to as SBC) announced on the 30th that it supported the issuance of corporate bonds worth 130 billion KRW for 47 promising small and medium-sized enterprises (SMEs) with high growth potential through scale-up financing.

Scale-up financing is a project that supports SMEs, which find it difficult to issue corporate bonds based on their own credit, to raise funds through direct financial markets. SMEs can raise the necessary funds by structuring the corporate bonds issued through scale-up financing into asset-backed securities (P-CBO) and selling them to private investors and SBC. The participation of private investors in purchasing asset-backed securities supplies large-scale funds at a level more than three times the amount of government financial input, thereby inducing the scale-up of SMEs.

Small and Medium Business Corporation

In particular, this year’s scale-up financing was issued as Korea’s first 5-year maturity asset-backed securities (P-CBO) to support SMEs in securing long-term and stable growth funds. Private financial institutions such as Hana Securities actively participated as subordinated bondholders, and NH Nonghyup Bank joined KDB Industrial Bank in credit enhancement of the asset-backed securities, strengthening private-led support.

The Ministry of SMEs and Startups and SBC focus on supporting excellent SMEs in innovative growth sectors and super-gap/new industry sectors through this scale-up financing. Looking at the status of companies participating in the scale-up financing corporate bond issuance, they are growth-stage SMEs with an average sales of 58.8 billion KRW, 118 employees, and 20 years of business experience. By credit rating, B+ grade accounts for 93.6% (BB- grade 6.4%), and 59.6% are in the innovative growth sector. The corporate bond issuance interest rates are applied differentially according to credit rating, with a maturity of 5 years, and the issuance scale per company averages about 2.8 billion KRW, ranging from a minimum of 1 billion KRW to a maximum of 7 billion KRW depending on the credit rating.

SBC will publicly issue the asset-backed securities as top-rated social bonds with policy purposes such as SME financial support and job creation to expand the domestic ESG (environment, social, governance) base and activate socially responsible investment, and list them on the Korea Exchange. Kim Hak-do, Chairman of SBC, said, “Scale-up financing is a project that supports SMEs, which find it difficult to issue corporate bonds based on their own credit, to raise large-scale funds and grow into next unicorn companies,” adding, “It will contribute to expanding new growth engines through direct financial support for innovative growth SMEs and ventures.”

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