Key Shareholders SK Telecom and Korea Aerospace Industries Participation in Focus
Largest Shareholder and CEO Kim Youngseom to Subscribe for About 3 Billion Won
Funds to Be Used for Advancing Generative AI and Developing Defense AI Products
Artificial intelligence (AI) software developer Konan Technology has launched a large-scale capital raising through a rights offering. The funds will be used to advance generative AI and develop defense AI products.
According to the Financial Supervisory Service's electronic disclosure system on July 29, Konan Technology will issue 1 million new shares, allocating 0.087 new shares per existing share. The planned issue price for the new shares is 29,050 won, and the total amount to be raised is 29.1 billion won. The company plans to invest the raised funds in expanding research and development (R&D) and its sales network.
Specifically, 10.2 billion won has been allocated for advancing generative AI, 7.8 billion won for R&D costs related to large language models (LLMs) and digital twin-based defense AI products, and 7.5 billion won for cloud leasing expenses.
Konan Technology, which developed the first proprietary LLM in Korea, has been consistently developing domestic AI technology based on its team of experts. Generative AI has become a core technology driving digital transformation across industries. Not only technical implementation capabilities but also real-world application cases and execution capabilities are now considered key competitive advantages for companies. The company explained that the rights offering is intended to accelerate its strategy and serves as a proactive measure to strengthen execution capabilities going forward.
Korea Investment & Securities, the lead manager for the rights offering, stated that Konan Technology launched its proprietary Korean large language model, 'Konan LLM,' in August 2023, and successfully won a contract for Korea South-East Power's in-house generative AI implementation project. This was the first case of LLM adoption in a public sector setting in Korea, and the company continues to expand applications in both public and private sectors.
Konan Technology is strengthening communication with shareholders to successfully raise funds. The company promised to share information transparently and respond diligently to questions from minority shareholders. Regular investor briefings are also planned.
Kim Youngseom, the largest shareholder and CEO, is expected to acquire approximately 43% of the new shares allocated to him. The participation scale of the second and third largest shareholders, SK Telecom and Korea Aerospace Industries, has not yet been determined. SK Telecom holds a 20.57% stake, while Korea Aerospace Industries holds 7.75%. Konan Technology provides search engine and speech synthesis technologies to SK Telecom's AI platform 'A.Dot' service. With Korea Aerospace Industries, the company is jointly developing an AI-based prognostics and health management (PHM) system applicable to urban air mobility (UAM). The participation of major shareholders is expected to influence the overall subscription rate for the rights offering.
An official from the financial investment industry commented, "Interest in the AI industry is growing, so it is somewhat disappointing that no financial investors (FIs) were sought." The official added, "However, since a standby underwriting agreement has been signed, the company should be able to secure a certain scale of funding."
Konan Technology's debt ratio rose from 22.8% in 2022 to 127.6% in the first quarter of this year. This increase in the debt ratio indicates that the proportion of debt to equity has been continuously rising. The company's financial structure may reduce its capacity to raise external funds.
On the 16th, Conan Technology held the 'Defense AI Tech Summit 2025' and unveiled three major AI technology promotion strategies for future defense.
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