The Korea Asset Management Corporation (KAMCO) has mandated investments in the shipbuilding materials and construction equipment parts sectors for its corporate support fund, known as the Priority Industry Loan Fund (PDF). This decision comes amid increasing external uncertainties due to U.S. tariffs and intensified competition with China, prompting a shift from its traditional focus on automotive parts.
According to financial sources on October 13, KAMCO recently announced plans to select an operator for PDF 7, which will include a mandatory investment ratio for small and medium-sized enterprises supplying parts to domestic shipbuilders and construction equipment manufacturers.
The PDF is designed to provide loans for operational and facility investment to small and medium-sized enterprises in key industries that require improvements in their business and financial structures due to deteriorating external management conditions. Previously, funding was primarily directed toward the automotive parts sector. While PDF 6 supported the shipbuilding materials and construction equipment parts industries, this is the first time investments in these sectors have been made mandatory.
KAMCO's decision to broaden its support industries is rooted in the recent deterioration of external conditions. The organization noted that prolonged high interest rates, tariffs, and intensified global competition have increased the need for support beyond the automotive sector. Specifically, the shipbuilding materials industry is experiencing slow recovery due to competition with China, while the construction equipment sector is facing decreased demand as construction costs rise due to tariffs.
The fund aims for a target size of 400 billion won, with a maximum of 500 billion won. The overall primary investment ratio is set at over 70%, with a combined investment ratio of at least 25% for shipbuilding materials and construction equipment parts.
Through PDFs 1 to 6, KAMCO has established a total fund of 1.8569 trillion won and provided 1.5638 trillion won in support to 88 companies. To date, there have been no reported losses or defaults among completed investments. The recovery rates for the liquidated funds 1 and 2 were 113% and 114%, respectively.
The criteria for supported companies have also been clarified. Previously, companies undergoing restructuring or financial improvement were classified as restructuring firms based on construction law. Now, the criteria will be based on corporate credit ratings and key financial indicators. Companies must meet at least one of the following conditions to qualify for support: a credit rating of BBB+ or lower, a debt ratio higher than the industry average, a current ratio lower than the industry average, or an interest coverage ratio below 1 or below the industry average.
Support for regional companies will also be expanded. PDF 7 aims to ensure that over 80% of the primary investment companies are located in regional areas, compared to approximately 60% in previous funds. A KAMCO official stated, "This measure aims to bridge the financial accessibility gap between companies in the metropolitan area and those in regional areas, contributing to balanced growth and the development of the industrial ecosystem across regions."
* This article has been translated by AI.
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