The Financial Services Commission has designated seven securities firms as the sixth cohort of specialized financial investment companies to supply capital market funding for small and venture enterprises. The commission aims to strengthen venture capital supply by extending the designation period to three years and expanding funding support and policy finance incentives.
On July 9, the commission announced the selection of BNK Investment & Securities, IBK Investment & Securities, SK Securities, Leading Investment & Securities, Eugene Investment & Securities, Korea Asset Investment & Securities, and Hanwha Investment & Securities as the sixth cohort of specialized financial investment companies for SMEs. The designation period runs from July 10 to July 9, 2029.
The specialized financial investment company system was introduced in 2016 to support capital market funding for small and venture enterprises and to enhance the corporate finance capabilities of small and mid-sized securities firms. A selection committee composed of external experts evaluates the financial support performance and business plans of small and venture enterprises before the final designation by the commission.
This time, the number of designated firms decreased from eight in the previous five cohorts to seven. DB Financial Investment and DS Securities were excluded, while Leading Investment & Securities was newly designated. The commission explained that this decision was made after a strict review focused on the firms' capabilities and the effectiveness of the system, coinciding with the 10th anniversary of the program.
Since the introduction of the specialized securities firms system nearly a decade ago, these firms have supplied a total of 17.9 trillion won in direct and indirect funding to small and venture enterprises. The largest portion, 9.2 trillion won, was allocated to support bond issuance, initial public offerings (IPOs), and capital increases, while 7.3 trillion won was directed to fund management and direct investments, and 1.3 trillion won was for mergers and acquisitions (M&A) advisory services.
Recently, the commission revised its operational guidelines to extend the designation period from two years to three. As a result, the newly designated securities firms will be able to provide venture capital to small and venture enterprises more stably over the next three years.
In collaboration with relevant agencies, the commission will significantly enhance support incentives. Starting in August, Korea Securities Finance will extend the maturity of securities collateral loans from a maximum of one year to three years and introduce a preferential program for long-term repurchase agreements (RPs).
The Industrial Bank of Korea plans to establish a new 50 billion won fund exclusively for specialized securities firms within the year, while Korea Growth Finance will increase the scoring criteria for selecting fund managers by more than 50%. Additionally, new scoring criteria will be introduced for some leagues of the National Growth Fund. The Industrial Bank of Korea aims to increase its investment in funds created by specialized securities firms from 26.5 billion won in the fifth cohort to over 100 billion won in the sixth cohort.
The Financial Services Commission and the Financial Supervisory Service will monitor the performance of specialized securities firms in supporting small and venture enterprises on a semi-annual basis, encouraging active venture capital supply. If necessary, they will consider designating up to three additional firms during the sixth designation period.
* This article has been translated by AI.
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