It is expected that venture investment funds worth a combined total of 1.4 trillion won will be raised this year and 1.3 trillion of it will be spent on new investments.
Neoplux vice chairman and Korea Venture Capital Association chairman Lee Jong-gap, who was recently elected to serve consecutive terms, held a press interview on February 22 at the grand conference room of the head office of the association located in Seocho-dong, Seoul and said, “This year, new venture investment funds worth 1.4 trillion won in total are expected to be raised thanks to the National Pension Fund’s investment expansion and re-investment in funds of funds.” He continued, “We’ve carried out a total inspection on venture capitals and found that the overall investment size will slightly increase from a year earlier to 1.3 trillion won.”
According to the association, 747.7 billion won of venture investment funds were raised last year, which is the lowest since 2005, as major investors such as the National Pension System and the Korea Finance Corporation decreased their investment. The overall investment declined 2.2% from 1,260.8 billion won to 1,233.3 billion won during the same period.
“Although private-sector enterprises and banks are still refraining from making new investments, funds of funds and the national pension fund are estimated to make an investment worth approximately 378 billion won and 350 billion won this year alone, respectively,” he went on, adding, “Some 80% of the new investment is likely to find its way into the information communications, general manufacturing and cultural contents industries to create more than 10,000 jobs given that a trillion won of investment in venture firms is considered to be equivalent to 10,000 new jobs.” He also said that he will attract the investment by appealing to investors having difficulties in finding appropriate investment destinations amid the low interest rate trend, including the national pension fund, mutual aid associations, banks and private enterprises.
In the meantime, it was STIC Investment that had the largest investment resources as of the end of last year (507.7 billion won), followed by Korea Investment Partners (489.8 billion won) and LB Investment (479 billion won). The top 10 on the list accounted for 36.5% of the total amount of 9,384.3 billion won. Their burn rate was 68.3% last year.
Korea Investment Partners spent the largest amount, 83 billion won, during the period and Atinum Investment (66.9 billion) and LB Investment (49.8 billion) followed it. Their total principal recovery amounted to 683.3 billion won last year -- 56.5% by over-the-counter selling and repayment, 22.4% by project financing and 17.8% by initial public offering. M&A accounted for just 1% to decrease rapidly for the fourth consecutive year since 2009, when the percentage had been 7.1%
“In 2012, not only was the number of IPOs low due to the sluggish stock market but also the strict listing requirements made capital recovery through listing difficult,” he remarked, “However, we’re anticipating that the KONEX market, which is going to be made available this year for venture firms in their early stage, will help venture capitals diversify their exit channels.”