The Financial Investment Association and the securities industry plan to invest approximately 1 trillion won in the venture secondary market over the next three years to stimulate the venture recovery market and establish a virtuous cycle for venture capital.
On August 31, the Financial Investment Association announced that it would pursue a plan for a 1 trillion won venture secondary investment in collaboration with the securities industry.
This investment will be conducted through a 'two-track' approach, involving individual investments by securities firms and the establishment of a joint fund. This strategy aims to leverage the differentiated investment capabilities of each securities firm while providing substantial funding through the joint fund.
Individual investments will be led by seven major investment banks (IBs) engaged in issuing commercial paper and comprehensive investment accounts (IMA), with an estimated scale of about 618.5 billion won. Participating firms include Mirae Asset Securities, Shinhan Investment Corp., NH Investment & Securities, KB Securities, Kiwoom Securities, Hana Securities, and Korea Investment & Securities.
Should additional approvals for issuing commercial paper be granted and relevant comprehensive financial investment firms participate, the scale of individual investments is expected to expand to approximately 700 billion won.
The joint fund will be established with a scale of 300 billion won, focusing on the top 15 securities firms by operating profit in 2025, along with the Financial Investment Association.
Participating firms in the joint fund include Kyobo Securities, Daishin Securities, Meritz Securities, Mirae Asset Securities, Samsung Securities, Shin Young Securities, Shinhan Investment Corp., NH Investment & Securities, Yuanta Securities, KB Securities, Kiwoom Securities, Toss Securities, Hana Securities, Korea Investment & Securities, and Hanwha Investment & Securities.
The Financial Investment Association stated, "The joint fund will play a pivotal role in providing stable liquidity to the venture recovery market and promoting private-sector secondary investment." It added that after selecting the final management institution through a public announcement, it plans to finalize the investment agreements and commence substantial investments.
The securities industry has been expanding venture capital supply in line with the government's focus on productive finance. However, there have been calls to enhance the recovery market's functionality, which has been overly reliant on initial public offerings (IPOs), to establish a virtuous cycle that includes investment, growth, recovery, and reinvestment.
This investment aims to support smooth recoveries for venture market investors and complement the IPO-centric recovery structure while promoting the circulation of funds within the venture investment ecosystem.
When combined with a separate support plan from related securities institutions, which could reach up to 1 trillion won, it is expected that approximately 2 trillion won will be supplied to the venture recovery market through the financial investment industry.
Hwang Seong-yeop, chairman of the Financial Investment Association, remarked, "This plan is significant as it demonstrates the securities industry's active participation in creating a growth ecosystem for ventures and innovative companies. We will continue our efforts to revitalize the venture recovery market and expand venture capital supply."
* This article has been translated by AI.
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