The National Growth Fund officially launched with a ceremony in order to support Korea’s growth engine for the next 20 years.
The Financial Services Commission (FSC) announced on Dec. 11 that it held the a launch ceremony and the first strategic committee Meeting.
The National Growth Fund is a general financial support program for cutting-edge strategic industries, the future of the Korean economy.
At the National Growth Fund National Report Meeting on Sept. 10, the FSC announced a plan to provide 150 trillion won in support over the next five years.
Since the National Report Meeting, the FSC has held approximately 30 working-level meetings to understand the National Growth Fund in relation to finance, industry, and regions.
Furthermore, the FSC has actively listened to the opinions of those in the private sector including industry and investment experts to refine the National Growth Fund’s decision-making system and operational plans.
The National Growth Fund Strategy Committee will serve as an advisory body on management strategies.
The committee will be co-chaired by FSC Chairman Lee Eok-won and Celltrion Group Chairman Seo Jung-jin, and Mirae Asset Group Chairman Park Hyeon-joo.
The committee will include experts from various sectors who will periodically provide feedback on the fund’s management direction and review its performances.
“The current situation is one of global competition for industrial and technological supremacy — a battle for survival,” FSC Chairman Lee Eok-won said.
“This requires the mobilization of all national capabilities. Only when industry and finance converge, the National Growth Fund will become a powerful engine that effectively supplies resources to innovative companies when they need them most.”
The National Growth Fund will intensively support cutting-edge strategic industries and their ecosystems that will lead Korea’s future.
It will also support venture and innovative companies and scale-ups within these ecosystems.
Furthermore, it will actively strive to allocate at least 40% of the National Growth Fund to non-Seoul regions.
The National Growth Fund will be comprised of 150 trillion won over the next five years.
The fund will be 75 trillion won in government-guaranteed bonds and 75 trillion won in private funds.
It will be divided into 15 trillion won in direct investment and 35 trillion won in indirect investment, 50 trillion won in infrastructure financing, and 50 trillion won in ultra-low-interest loans.
The amount of private funding is the minimum required to secure the Advanced Technology Fund and government finance (1 trillion won in next year’s budget).
It is expected to expand further depending on the funding structure for each project.
The National Growth Fund will support not only companies directly engaged in advanced strategic industries, but SMEs and technology-powered companies in general through equity investment funds.
In particular, the Ultra-Long-Term Technology Investment Fund will support long-term investments of 10 years or more for promising companies requiring long-term, patient capital.
Direct equity investment will also be utilized to actively provide investment capital to advanced technology companies with the potential to grow into decacorns (unlisted startups with corporate values of 10 trillion won or more).
Direct investment involves direct participation in capital increases for small and medium-sized enterprises that face difficulties issuing corporate bonds or securing low-interest loans, or in capital increases for special purpose companies (SPCs) used for large-scale factory expansions.
The Advanced Fund in collaboration with financial institutions and industry will directly participate in capital increases for growth companies.
For projects with high policy imperatives, government funds invested through Korea Development Bank (KDB) can also participate as direct equity investors.
Demand will be generated for the establishment of SPCs for next-generation AI solution developers and AI robot ecosystems.
Indirect investment involves jointly creating a large-scale fund with the Advanced Fund and private capital to make equity investments aligned with policy objectives.
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