Lee Dong-geol Takes on 'Nurturing Innovative Companies'... KDB Invests 100 Billion Won in Toss (Comprehensive)

Chairman Dong-geol Lee of KDB, Accelerates 'Innovative Growth' Efforts
KDB to Confirm 100 Billion KRW Investment in Toss as Early as Next Week

[Asia Economy Reporter Jin-ho Kim] "Although it may not be at the level of the Vision Fund led by SoftBank Chairman Masayoshi Son, it seems necessary for us to also gather funds and focus on supporting scale-up (high growth)."

Lee Dong-geol, Chairman of the Korea Development Bank (KDB), is accelerating his 'innovation growth' efforts. This comes as he decided to make a large-scale investment of around 100 billion KRW in the fintech upstart Toss (Viva Republica). This strong will of Chairman Lee to lead future innovation growth beyond the fixed notion of KDB as a bank dedicated to corporate restructuring is beginning to show results one by one, according to evaluations.

According to the financial sector on the 18th, KDB will hold a credit approval committee meeting as early as next week to give final approval for the investment proposal of about 100 billion KRW in Toss. A KDB official said, "Specific details such as the investment deadline and amount will be finalized through the credit approval committee," adding, "The large-scale investment amount reaching 100 billion KRW carries significant meaning."

The Toss investment was led by KDB's 'Scale-up Finance Office.' The 'Scale-up Finance Office' was established at the end of 2019 with Chairman Lee's special mission to nurture prospective unicorn companies.

The amount KDB is betting on Toss is around 100 billion KRW, which is larger than any startup investment it has made so far. Considering that KDB invested a total of 480.8 billion KRW in 36 companies last year, one can estimate the scale. The background for this bold investment decision is attributed to Chairman Lee's 'innovation finance' philosophy.

Chairman Lee has consistently argued that to invigorate the Korean economy, which struggles to escape a 'low growth trend,' at least 'dozens of unicorn companies (unlisted startups with a corporate value of over 1 trillion KRW)' must emerge. For startups to grow rapidly, smooth capital supply is key, and finance plays an important role, which KDB intends to take on.

It is also analyzed that Chairman Lee's interest in startups and fintech is reflected in this move. Since his inauguration, he has visited global startup hubs in Europe and the United States several times, pointing out that 'domestic scale-up investments are insufficient compared to advanced countries.' An industry insider said, "The ability to execute a large-scale investment in Toss is largely due to Chairman Lee's will," adding, "As the financial industry rapidly shifts to fintech, KDB had no choice but to actively prepare for this change."

The 100 billion KRW investment in Toss will be conducted through an 'equity investment' method. It is analyzed as a strategy to accelerate collaboration with the fintech company Toss through a large-scale equity investment. Industry insiders expect KDB to hold about 5-10% of Toss's shares through this investment. A Toss official said, "The exact shareholding ratio will be disclosed soon, including the results of this paid-in capital increase," adding, "At this point, it is premature to speculate."

Meanwhile, Toss, which had planned a paid-in capital increase of 200 billion KRW ahead of the launch of Toss Bank in the second half of this year, is reported to have more than doubled the total amount of investment raised with KDB participating as an investor. The participation of a policy bank has actively attracted investments from major companies and institutions.