9.7 Trillion Won Applied for Industrial Bank Policy-Type New Deal Fund Investment Project

First Step in New Deal Fund Formation
Industrial Bank Forms 510 Billion KRW Policy New Deal Fund Mother Fund as of 28th

[Asia Economy Reporter Park Sun-mi] Korea Development Bank and Korea Growth Investment Corporation announced on the 27th that, following the policy-type New Deal Fund's '2021 Regular Delegated Manager Selection Plan' announced last month, a total of 84 asset management companies applied for a scale of 9.7 trillion KRW, which is 3.2 times the fundraising target.

By investment sector, 70 asset management companies proposed 7.4 trillion KRW in the corporate investment sector, and 14 asset management companies proposed 2.3 trillion KRW in the infrastructure investment sector. Korea Development Bank and Growth Investment Corporation plan to complete the selection process of asset managers by the end of February through a transparent and fair evaluation process, and sequentially form and invest in sub-funds to support the successful promotion of the Korean New Deal.

The policy-type New Deal Fund, unlike existing policy funds, allows asset managers to propose core fund elements such as investment sectors, fund size, policy contribution ratio, and benchmark returns according to their investment strategies, and provides various incentives such as subordinated contributions, excess profit transfer, and call options, thereby greatly expanding private sector autonomy in a market-driven structure. Accordingly, the private sector has shown great interest, and many asset managers are evaluated to have proposed New Deal Fund investment operations employing new investment strategies across the digital and green sectors.

Meanwhile, with 510 billion KRW reflected in this year's government budget for the formation of the policy-type New Deal Fund being contributed to Korea Development Bank today, Korea Development Bank plans to contribute 510 billion KRW to the policy-type New Deal Fund's mother fund and form the mother fund as of the 28th. The mother fund to be formed this time will play roles such as sharing investment risks, matching private investment funds, and providing incentives. In particular, with the formation of the mother fund enabling immediate contributions to project-type funds that are accepted on an ongoing basis, policy-type New Deal Fund investments are expected to proceed more rapidly.

An official from Korea Development Bank stated, “As seen from the results of this proposal submission, market participants are showing very high interest in the policy-type New Deal Fund, so we expect smooth matching of private investment funds and formation of sub-funds in the future.”