Dongguk Holdings Plans to Establish CVC
Following SeAH Holdings, Ventures into Venture Investment
Investment Boom in Steel Companies like Pogitu and Gyeongnam Venture
Following SeAH Steel's establishment of SeAH Technology Investment through SeAH Holdings, Dongkuk Steel is also set to establish a corporate venture capital (CVC) through Dongkuk Holdings (tentative name), signaling an increase in investment firms within the steel industry.
According to industry sources on the 3rd, Dongkuk Steel is pushing forward with the establishment of a CVC. The outline became clear recently during the regular shareholders' meeting where the group growth strategy following a spin-off was announced. Through this spin-off, Dongkuk Steel will separate into the surviving company 'Dongkuk Holdings (tentative name)' and newly established companies specialized in hot-rolled and cold-rolled steel businesses, 'Dongkuk Steel (tentative name)' and 'Dongkuk CM (tentative name)'.
Particular attention is focused on Dongkuk Holdings. As a holding company, Dongkuk Holdings will be responsible for exploring strategic investment targets that can create synergy effects with the steel business. It plans to establish a CVC under Dongkuk Holdings to discover new growth businesses leading future trends.
The venture capital industry is closely watching what form Dongkuk Steel's CVC will take. Generally, CVCs are divided into venture capital companies (Venture Capital firms) and new technology finance companies (New Tech Finance firms). Most currently active CVCs operate as New Tech Finance firms. Although the establishment requirements are more stringent than those for venture capital firms, they can broadly explore investment targets. Dongkuk Steel's CVC is also expected to operate as a New Tech Finance firm.
Earlier, at the end of last year, SeAH Steel established SeAH Technology Investment with 100% equity investment from SeAH Holdings. It recently secured a New Tech Finance license. The company focuses on industries with growth potential such as robotic automation, visioning, and eco-friendly technologies. In particular, it is expected to invest in startups in digital transformation (DT) and future manufacturing sectors.
The leading VC in the steel industry is POSCO Technology Investment. The POSCO Group has been operating POSCO Technology Investment since 1997. POSCO Technology Investment also holds a New Tech Finance license. It has already established its position in the VC industry. Its assets under management (AUM) have exceeded 2 trillion KRW. It has secured a diverse portfolio over time.
Daehan Steel also owns a VC. Daehan Steel is the largest shareholder with a 59.6% stake in Gyeongnam Venture Investment located in Changwon, Gyeongsangnam-do. After establishing Daehan Investment Partners in 2016 and later dissolving it, the company created a new management firm. In 2019, together with Gyeongnam Creative Economy Innovation Center, NH Nonghyup Bank, and BNK Gyeongnam Bank, it established Gyeongnam Venture Investment.
While all of these companies focus on areas that can create synergy effects with their core steel businesses, they do not limit their investment fields. For example, POSCO Technology Investment has invested in the real estate platform company 'Zigbang', and Gyeongnam Venture Investment has invested in Nature Mobility, the operator of Jeju rental car platform 'Jjimcar', among others.
An industry insider said, "While it is true that competition intensifies as the number of CVCs increases, it is positive for industry development," adding, "If a CVC with the scale and capability of POSCO Technology Investment emerges, it will benefit the venture investment ecosystem." He further noted, "Unlike independent VCs, these have the advantage of group support."
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