- KOFIA announced on August 31 plans to collaborate with securities firms for approximately 1 trillion won in venture secondary investments over the next three years.
- The investments will proceed via individual investments amounting to about 618.5 billion won and a joint fund of 300 billion won formed by the top 15 securities firms.
- KOFIA plans to select a fund manager and begin investing after capital commitment agreements are signed.
- The securities industry aims to support a virtuous cycle of investment-growth-exit-reinvestment by revitalizing the exit market.
- The secondary investment market, where existing investors sell their holdings to other investors, has been criticized for its weak capital recovery function.
- The funding initiative is aligned with the government's drive to strengthen productive finance and aims to create a self-sustaining cycle for risk capital.
South Korea's securities industry is set to invest 1 trillion won ($720 million) over the next three years to bolster venture capital exits, as announced by the Korea Financial Investment Association (KOFIA) on August 31. This initiative aims to revitalize the venture market and create a self-sustaining cycle for risk capital.156
The investment will be executed through two main channels: individual investments by major securities firms and a joint fund of 300 billion won led by KOFIA and the top 15 brokerages. Individual investments are expected to total approximately 618.5 billion won, with potential growth to 700 billion won if additional firms join.234
KOFIA Chairman Hwang Sung-yeop emphasized the importance of this plan, stating, “This is significant in that the securities industry is actively taking part in building a growth ecosystem for venture and innovative companies.” The initiative is aligned with the government’s push for productive finance and aims to enhance the exit structure, which has been heavily reliant on initial public offerings.8
The secondary market, where existing investors sell their holdings, has faced criticism for its weak capital recovery function. KOFIA aims to address this by injecting funds into the venture recovery market, with total investments across the financial sector expected to reach 2 trillion won. Hwang added, “We will continue our efforts to revive the venture exit market and expand the supply of risk capital.”
This funding strategy is anticipated to facilitate smoother exits for venture investors and encourage reinvestment into new ventures, thereby supporting sustainable growth in the ecosystem.
“The plan includes 618.5 billion won in direct investments from seven mega investment banks, potentially rising to 700 billion won if more firms join. Combined with separate support measures, total capital flowing into the venture exit market could reach 2 trillion won.”
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