A group of policy financial institutions including Korea Development Bank has signed an agreement with LG Chem to help foster the company’s electric vehicle (EV) battery business. It was the first agreement under the industrial-financial cooperation program launched by the Korean government in September to facilitate overseas acquisitions and investment.
The policy financial institutions, which also included the Export-Import Bank of Korea and NH Nonghyup Bank will provide US$5billion in loans to LG Chem over five years from 2020 to 2024. LG Chem will use the funds to set up global EV battery production plants.
“The financial institutions will provide the loans at the normal market interest rate,” an official of the Financial Services Commission said. “LG Chem can secure a stable supply of investment funds even if the market becomes unstable.”
In addition, these institutions and LG Chem will create a 150-billion-won win-win growth fund to support small and mid-sized suppliers in the secondary battery industry. They will deposit the fund at Korea Development Bank and provide low-interest loans to the suppliers with the interest on the fund. The Export-Import Bank of Korea also agreed to provide preferential loans amounting to 200 billion won to them. Both sides will also carry out research on the secondary battery business.