KAMCO signs a business agreement on promoting structural improvements in small and medium-sized enterprises with the Korea SMEs and Startups Agency (KOSME) at KAMCO Yangjae Tower on Aug. 26. Third from left is Moon Sung-yu, president of KAMCO and fourth from left is Kim Hak-do, chairman of KOSME. (Photo: KAMCO)

KAMCO announced on Aug. 30 that it has established a 300-billion-won private debt fund (PDF) to support the auto and shipbuilding parts industries, in line with the government’s policy to support the nation’s major industries.

A PDF refers to a private equity fund that invests money in the form of loans.

The PDF No. 2 was set up to supply liquidity not only to the auto parts industry, but to the shipbuilding parts industry, which needed financial support by expanding the scope of the major industries concerned following PDF No. 1 in 2020.

KAMCO’s PDF No. 1 was established in December last year. The state-run company spent about 85 percent of the fund in six months, due to demand for facility investment and restructurings of automotive parts makers, providing liquidity for them in a timely manner.

To this end, KAMCO played the role of pump-priming to induce investment from the private sector by selecting Woori Global Asset Management as a fund management company in May, and making a subordinated investment of about 100 billion won.

The PDF No. 2 targets small- and medium-sized companies that signed a contract to supply products with Korean automakers and shipbuilders.

Small and medium-sized companies can receive loan support by putting up sales receivables as collateral.

The PDF No. 2 was created to provide timely support in response to continuous market demand. Most of the funds will be executed within this year in light of current demand for funds.

“With the acceleration of a paradigm shift in the industry, companies' need to restructure their businesses and financial demand for it are also on the uptick,” said Moon Sung-yu, president of KAMCO.

“We will ramp up corporate support funds and actively play our roles as an anchor investor that provides pump-priming water for PDFs and private equity funds (PEFs) for companies undergoing restructurings.”

Meanwhile, KAMCO is supporting companies by operating various programs, such as investment in PEFs and PDFs, to help troubled companies normalize their management.

The organization is also helping companies issue secured debts, a sale and leaseback program, DIP finance for companies which successfully finished workout programs, a corporate asset sales support program and ship funds.

On Aug. 26, KAMCO signed a business agreement on promoting structural improvements in small and medium-sized enterprises with the Korea SMEs and Startups Agency (KOSME).

The agreement is designed to support improvements in troubled SMEs’ financial structures and the normalization of their business operations by connecting the two organization’s corporate support programs.

Through this agreement, KAMCO selects companies that need additional funds among companies which accepted the Sales and Leaseback (S&LB) Program from KAMCO and recommends them to the KOSME to help them receive policy funds exclusively for structural improvements.

The S&LB Program provide liquidity to companies by leasing back fixed assets such as factories and offices of companies going through temporary liquidity crises after purchasing them.

KAMCO plans to offer the S&LB Program to companies which need to make an improvement to their financial structures and secure liquidity through the sale of their assets among companies which receives policy funds from the KOSME. The KOSME recommends such companies to KAMCO.

 
The two organizations will scale up the effects of improving SMEs’ structures and the normalization of their management by setting up a mutual cooperation system to support SMEs and supplement SME support programs.