Fund to Be Expanded from 1.6 Tril. Won to 2.6 Tril. Won
The South Korean government is planning to increase its corporate structure innovation fund for the purpose of market-led corporate restructuring.
“Corporate liquidity crises leading to insolvency crises and turning of normal enterprises into restructuring targets are unlikely to be few in number,” said Financial Services Commission Vice Chairman Sohn Byung-doo, adding, “Market-led corporate restructuring based on abundant private funds and ideas is indispensable in this regard and in that creditor banks’ support for such targets cannot but be limited for allowances requirements.”
The government is going to increase the fund from 1.6 trillion won to 2.6 trillion won. The fund of funds will bear 501.5 billion won and the same amount will be prepared by private investment. The purpose of the fund is to assist corporate restructuring and provide profits for investors.
In addition, the government will introduce a private debt fund to allocate 30 percent of the additional fund to it. The private debt fund can be defined as financial support based on loans, convertible bonds and bonds with warrants.
The scope of the corporate structure innovation fund will be expanded, too. Specifically, it will cover large companies as well as smaller companies. Also, the government is considering expanding the scope to cover innovative sectors as well as manufacturing.