Completion of 160 Billion KRW Raised for 1st Technology Innovation Fund

Fund Subscription Ceremony Among 3 Fund Management Companies and Institutions
Investment Briefing Held for 20 Technology Innovation Companies Targeting Fund Managers

Jang Young-jin, Director of Industrial Technology Convergence Policy at the Ministry of Trade, Industry and Energy (Acting Director of the Industrial Innovation Growth Office). (Photo by Ministry of Trade, Industry and Energy) [Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] The Ministry of Trade, Industry and Energy announced on the 13th that from 10 a.m., it will hold a 160 billion KRW first-phase Technology Innovation Fund investment closing ceremony and an investor relations (IR) presentation for 20 technology innovation companies at the Korea Chamber of Commerce and Industry in Seoul.

This is the first fund specializing in investing in corporate research and development (R&D) activities. Wonik Investment Partners, POSCO Technology Investment, SG Investment, and Kiwoom Investment, selected as asset management companies for the first-phase fund this year, have each completed fund closings worth approximately 53.5 billion KRW (totaling 160 billion KRW).

The three management companies will discover innovative companies over the next three years starting from this day. They plan to invest about 3 to 5 billion KRW per company over approximately four years in the companies' R&D activities. The fund will be operated on a structure where investment returns are recovered when companies increase profits and corporate value through research and development.

In particular, this first-phase fund will focus investments on manufacturing sectors, which have not seen active investment in the market so far.

The fund is the first case of creating a fund that allows investment in corporate R&D activities from a market perspective, breaking away from the previous government subsidy method of supporting corporate R&D.

It is characterized by not using any government budget and being established by utilizing 280 billion KRW in basic capital contributed by dedicated banks such as IBK Industrial Bank and KDB Industrial Bank, which deposit the Ministry of Trade, Industry and Energy’s R&D funds.

Starting with this first-phase fund of 160 billion KRW, a total of 500 billion KRW will be raised in three rounds by 2022.

The investment closing ceremony was held to announce the official start of corporate investment and to foster an investment atmosphere. The three management companies, IBK and KDB (basic investors), Korea Growth Investment Corporation (the mother fund management institution), and three institutions including the Korea Institute for Advancement of Technology (the industrial R&D dedicated institution) signed a "Technology Innovation Fund Formation and Support Business Agreement."

These institutions agreed to strengthen cooperation in discovering companies, investing, and supporting companies to ensure that the Technology Innovation Fund can effectively invest in various innovative technology companies in the market.

The R&D dedicated institutions will provide the management companies with diverse information on innovative companies that have participated in government R&D. The banking sector plans to link corporate financial support policies to encourage management companies to actively discover innovative companies.

At the investor relations presentation held in the afternoon, 20 technology innovation companies selected through prior document screening presented their future technology innovation strategies and business plans to the three management companies.

An official from the Ministry of Trade, Industry and Energy said, "The 20 companies were evaluated in the preliminary screening as having very high technological capabilities and good marketability of their developed products," adding, "The management companies are expected to select several companies and conclude investment cooperation as early as this year."

R&D-centered innovative companies such as Optorain (developing on-site diagnostic digital molecular diagnostic system technology), Sumbi (developing maritime rescue drones, etc.), Seowon Tech (plastic waste reprocessing), TDL (developing all-solid-state battery materials for electric vehicles), and Costexis (developing integrated packaging for 5G power amplifiers) participated in the IR.

Jang Youngjin, Director of Industrial Technology Convergence Policy at the Ministry of Trade, Industry and Energy, stated, "Through this Technology Innovation Fund supporting corporate R&D via private investment methods, it is expected that more innovative companies free from the constraints of existing government R&D support methods will be discovered and supported."

Director Jang added, "We plan to continue efforts to organically link and cooperate between government R&D-supported innovative companies such as material, parts, and equipment leading companies, World Class 300 companies, excellent manufacturing technology research center companies, and market technology innovation funds."