Dian Diagnostics, China’s largest health diagnostics company and medical equipment maker, has been looking for a Korean bio R&D firm since its shares were listed on the Chasdaq in 2011 to expand its medical equipment production operation.
As fate would have it, the Korean bio manufacturing company Aram Bio was looking for a large retail company in China to partner with, but struggled to find an investor because its capital was only about 4.2 billion won.The company’s plan got a big boost when Korea Development Bank (KDB) decided to provide 70 billion won and the Industrial Bank of Korea (IBK) 120 billion won to launch the Global Partnership Fund (GPF) in November 2014. GPF was set up to help venture capital firms set up venture funds. After a “mother fund” is set up with help of KDB and IBK, affiliated funds will help domestic ventures and business firms advance into global markets.
According to industry sources, GPF has been having great success in assisting domestic venture firms go overseas for business and the advancement of the domestic venture market. In December 2014, GDF provided 37.4 billion won to set up an affiliate fund to invest in a joint venture by Dian Diagnostics and Aram Bio. They produce medical equipment in China. The money helped them prepare to compete in the Chinese medical equipment market after securing a license. Dian Diagnostics jointly operated the Chinese company’s sales network in China, including its plant, through an MOU signed between Aram Bio and Dian Diagnostics.
Until October, last year, five affiliated venture funds were established totaling 400.5 billion won. In July, last year, Peter Till, the co-founder of Paypal, participated in the fund, along with affiliated funds in the U.S. and Britain. British funds joined their counterparts in Korea due to a meeting held by the Financial Services Commission and the British financial authorities in April 2014 in London, with the theme of “Korea-Britain Financial Cooperation Forum,” which explained financial regulations for foreign investors in Korea.
Venture funds from China and Japan joined the GPF No. 2 at the end of last year, which helped set up five venture capital funds totaling 248.2 billion won with IDG of China, and the Global Brain of Japan joining. KDB and IBK will set up GPF No. 3 Fund with the participation of private investors in Korea. Multi Asset Management, former KDB Asset Management, had a meeting in Hong Kong with private equity capital firms Sept. 22-23, where they agreed to establish a GPF network.
Multi Asset Management, which operates the fund, has selected six fund operators — WTR Health, Excelsior Capital, Thiel Capital and Octave Capital, Twosun Investment, SV Investment and Capstone Partners. They will create venture funds valued at 300 billion won from December to June of next year.
The operators include global investors and venture capitals from China, the United Kingdom, the United States and Korea, such as pension funds, alternative investment institutions and asset management firms.
WTR Health is a U.K.-based venture capital firm that specializes in the health care business. The company will set up a venture capital firm in Korea, as it has been interested in the Korean bio venture industry.
KDB said it would be the first time a foreign firm in the region has establish a venture capital firm in Korea. It means that it will support Korean venture firms and small- and medium-sized enterprises.
Also, Thiel Capital, a Silicon Valley-based firm, will establish a joint fund with Octave Capital, a Korean firm.
Chinese Internet firms such as Tencent and Dian Diagnostics will participate in the fund as strategic investors.
In the meantime, KDB signed a partnership agreement in managing emerging Asian funds with the World Bank recently. Chairman Lee Dong-geol and Gov. Jim Yong Kim of the World Bank signed for their respective financial institutions at the Wrold Bank headquarters in Washington D.C.
The International Financial Fund under the World Bank will secure funds from various international funds including retirement funds, wealth funds, and state-run banks and invest them in emerging nations in Asia. KDB will join the fund as the representative financial institution in Korea.
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