Corporate Structure Innovation Fund
Korea Growth Investment Corporation (KGIC) is planning to make a public notice late next month on investment in the second corporate structure innovation fund. The size of the second fund is estimated at approximately one trillion won, close to that of the first fund. The purpose of the new fund is to respond to the increasing necessity of restructuring in major industries attributable to the spread of COVID-19.
As for the second fund, the ratio of blind funds is scheduled to increase and general partner selection is scheduled to be conducted once instead of twice for two years, which means the de facto fund supply will be doubled.
The corporate structure innovation fund of KGIC was established in August 2018 so that corporate restructuring led by the private sector rather than creditor institutions can be accelerated. In that fund, a fund of funds is prepared based on investment from government-run and commercial banks and general partners supported by the fund prepare the same amount. Six blind funds (400 billion won) and four project funds were executed for the past two years, and the beneficiaries include Sungdong Shipbuilding & Marine Engineering and KG Dongbu Steel.
Major private equity funds are paying attention to whether the notice will include a private debt fund planned to be introduced this year. The investment target of the private debt fund is not equity but debt. This means the private equity funds can anticipate a fixed interest income by lending money to companies in urgent need of cash or undergoing short-term liquidity difficulties.