Pension Fund Investment Pool Makes First Venture Investment... 40 Billion Won "LP First Step Fund" with Korea Fund of Funds

First Venture Investment by Pension Fund Investment Pool Since 2001
20 Billion Won Each Invested to Establish "LP First Step Parent Fund"
Boosting the Exit Market and Expanding Public and Private Capital Inflows Expected

On August 27, the Ministry of SMEs and Startups announced that the Korea Fund of Funds and the Pension Fund Investment Pool (Trade Insurance Fund) will jointly invest 40 billion won in the "LP First Step Fund."

The "LP First Step Fund" is a newly established fund this year designed to encourage institutional investors such as pension funds and financial institutions, which have no prior experience investing in venture capital funds, to participate in venture investments. The Korea Fund of Funds offers enhanced incentives such as first-loss coverage, excess return transfer, and equity purchase rights, and allows the initial investor to freely set the investment sector, which is a key feature.

Based on these advantages, the Trade Insurance Fund, which manages part of its surplus assets through the Pension Fund Investment Pool, is participating in a venture fund investment for the first time. This marks the first venture investment since the Pension Fund Investment Pool system was introduced in 2001 to efficiently manage surplus assets from pension funds in an integrated manner.

The Trade Insurance Fund and the Korea Fund of Funds have each invested 20 billion won to establish a parent fund, and through this investment initiative, they plan to select sub-fund managers to manage a total of 57 billion won. The sub-funds will focus on the "secondary" sector, reflecting the investment demand of the initial investor, the Trade Insurance Fund, and are expected to contribute to the activation of the exit market.

Han Sung-sook, Minister of SMEs and Startups, stated, "Although the Korea Fund of Funds has primarily invested in highly public sectors, it has achieved a stable return of over 10% over the past five years. This proves that it is a useful means for surplus funds, such as those from pension funds, to generate stable profits." She added, "With the launch of the 'LP First Step Fund,' the Pension Fund Investment Pool is opening the door to productive finance, and the Korea Fund of Funds will strengthen its role as a 'venture investment platform' so that more public and private surplus funds can flow into the venture investment market."

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