Meritz Securities Surpasses 350 Billion KRW in Assets Under Management for New Technology Finance Association

[Asia Economy Reporter Jang Hyowon] Meritz Securities (CEO Choi Heemun) announced on the 31st that its New Technology Finance Association's assets under management (AUM) have surpassed 350 billion KRW.

Meritz Securities' New Technology Finance Association has rapidly increased its scale, achieving an AUM of 351.8 billion KRW in just over five years since its establishment in February 2018. The cumulative AUM reaches 517.2 billion KRW. Despite the challenging market conditions due to increased financial market uncertainty last year, it formed eight associations totaling 183 billion KRW.

To establish a New Technology Finance Association, registration of a New Technology Business Finance license is required. Upon registration, investments and loans to small and venture companies based on new technologies can be conducted with venture capital qualifications. Meritz Securities created the New Technology Finance Team in 2017 to support the growth of small and venture companies possessing core technologies and to build a virtuous cycle structure that leads from fund recovery to reinvestment.

The industry is paying attention to the fact that this achievement was made by recruiting investors solely from private investors without any policy fund contributions. The LPs (limited partners) of the associations formed by Meritz Securities consist of financial institutions including trust companies (71%), listed companies and general corporations (15%), and individual professional investors (15%), with no policy fund contributions. This contrasts with venture capital operators who have increased their assets under management by forming blind funds with policy funds.

Along with the growth of assets under management, excellent operational performance has also been achieved. To date, a total of 30 associations have been formed, including 4 blind associations and 29 project associations. A total of 473.5 billion KRW has been invested in 51 companies across ICT, bio, semiconductors, and more. Among these, 10 associations have been liquidated, achieving an average IRR (internal rate of return) of 13%.

The operating principles of Meritz Securities' New Technology Finance Team are ‘responsible investment’ and ‘communication.’ They verify investment targets through thorough analysis and take on the role of a responsible GP (general partner) by contributing a significant amount of the company's own capital. By collaborating with various operating institutions, they discover differentiated investment targets and align interests with investors through direct investment rather than merely collecting fees.

Additionally, to respond to the diverse demands of LPs, they actively engage in communication with issuers and due diligence of investment targets. Approximately 90% of the total investment amount is invested in new shares, maintaining close relationships with issuers. They also conduct thorough post-investment management and monitoring to build trust with LPs.

A Meritz Securities official stated, “We plan to expand the New Technology Investment Association's AUM to 500 billion KRW this year,” adding, “We will collaborate with various investment institutions to provide excellent investment opportunities to our clients.”