Chairman Yoon Jong-kyu of KB Financial Group. (Photos: KB Financial Group)

KB Financial Group will step up efforts to provide full-fledged support for the success of the Korean New Deal led by the Korean government.

KB Financial Group announced on June 1 that it will launch Investment-Type KB New Deal Special Asset Investment Trust for Infrastructure Investment, a policy-type New Deal infrastructure fund worth a 200 billion won to invest in the Korean New Deal.

KB New Deal Infrastructure Fund is a blind fund that invests not only in new and renewable energy generation projects, but also in the entire New Deal infrastructure sector such as environmental facilities, electric vehicles and hydrogen car charging stations.

KB Financial Group is pushing for providing 10 trillion won in support funds for the Korean New Deal by 2025.

The financial group attained 78 percent (2.5 trillion won) of the target (3.2 trillion won) as of the end of April. Based on investment by KB New Deal Infrastructure Fund, KB Financial Group plans to direct its capabilities on Korean New Deal policies.

KB Asset Management participated in a tender for the “2021 Policy New Deal Fund (Infrastructure)” promoted by Korea Growth Investment Corp. and Korea Development Bank on December 29 last year.

It was selected as an entrusted operator on February 26 as the Korean government duly recognized its differentiated investment strategies and excellent investment results.

KB Financial Group affiliates invested a total of 103.1 billion won.

They included KB Kookmin Bank, which is an anchor investor, KB Insurance, KB Life Insurance, Prudential Life Insurance, and KB Asset Management. Korea Growth Investment Corp. and Korea Development Bank invested 36.9 billion won, and two large domestic insurers invested 60 billion won in policy funds.

“We are providing support such as investment participation by group affiliates to successfully create New Deal Infrastructure Fund,” a KB Financial Group official said. “We will serve as priming water for the promotion of New Deal projects based on our leadership in the renewable energy and environmental facility investment market.”

On the other hand, KB Financial Group plans to expand the amount of ESG financial products, investments, and loans to 50 trillion won by 2030 based on KB GREEN WAVE 2030 Strategy, a mid- to long-term roadmap for the group’s ESG management.

Issuance of Green Bonds

The issuance of green bonds has been uptick in the Korean financial sector following financial companies’ declaration of environment, social and governance (ESG) management. Earlier, banks issued trillions of won worth of EGS bonds. This trend is spreading to financial groups, encouraging them to issue green bonds.

KB Financial Group announced on May 28 that it has issued green bonds in the form of contingent convertible bonds worth 110 billion won. This marked the first time a Korean financial group issued green bonds.

Funds raised through the issuance of the green bonds will be used to give financial support to eco-friendly projects.

The green bonds were issued with a 10-year call option of 110 billion won and a 3.6 percent coupon rate. Analysts say that KB Financial Group yielded relative good results in spite of the contingent convertible bond market due to a recent hike in the interest rate.

In March, KB Kookmin Bank issued 100 billion won in green bonds and KB Securities 110 billion won in green bonds.

In addition to 110 billion won in green bonds, KB Financial Group plans to issue a total of 276 billion won in contingent convertible bonds including a five-year 166- billion- won call option in order to boost its capital adequacy.

“The issuance of green bonds is quite meaningful in that funds are used in eco-friendly areas promoted by the Korean government,” a KB Financial Group official said. “In the future, KB Financial Group will take the lead in practicing ESG management in line with its status as a leading financial group in ESG management including the green sector.”

A view of KB Financial Group Headquarters building.