South Korea has transferred $2.4 billion (approximately 3.26 trillion won) to the United States for its first investment project. This marks the actual funding phase of a $200 billion strategic investment agreement reached during last year's U.S.-South Korea tariff negotiations.
According to the Ministry of Economy and Finance, the government sent the $2.4 billion to fund the construction of a gas-fired combined cycle power plant in Encinada, Texas. This project aims to supply electricity to artificial intelligence (AI) data centers in the U.S. The total project cost is estimated at $22.3 billion.
A ministry official stated, "We transferred the initial investment of $2.4 billion today at the official request of the U.S. side, and the timing and frequency of future transfers have not yet been determined."
This transfer is a follow-up action to the 'U.S.-South Korea Strategic Investment Memorandum of Understanding (MOU)' announced by both countries. The initial funding occurred shortly after President Donald Trump announced South Korea's investment plans on September 30.
The U.S. investment will be carried out through special purpose vehicles (SPVs) for individual projects, with South Korea providing the funding. An investment purpose corporation (I-SPV) will manage the overall project, handling financing and profit distribution, while project-specific corporations (P-SPVs) will execute individual projects.
Protection measures for investment recovery have also been established. In the event of losses in specific projects, a 'risk pooling' method will be applied, allowing profits from other projects to offset these losses. This ensures that even if the profitability of individual projects declines, the overall project's profits can be aggregated to recover the principal and interest.
Profit distribution will be shared equally between the U.S. and South Korea until the latter recovers its principal and interest. After the recovery, the U.S. will receive 90% of the profits, while South Korea will take 10%. The government plans to utilize risk pooling to minimize the impact of losses from individual projects on the overall investment performance.
Regarding the second project, which involves the construction of eight large nuclear power plants in the U.S., the government plans to transfer an additional $10 billion depending on the project's progress. Both countries have agreed to cooperate in transferring the advance payment of $10 billion by the end of this year, contingent upon meeting domestic legal requirements. The government explained that this is a measure to secure long-lead items early.
Funding for the U.S. investment will be sourced from foreign asset management revenues and the issuance of government-guaranteed foreign currency bonds. The limit for state guarantees on next year's U.S.-Korea strategic investment bonds has been set at $7 billion.
* This article has been translated by AI.
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