K-Growth to earmark W5.4tr risk capital for 2020

South Korea’s state-led fund of funds manager Korea Growth Investment (K-Growth) said Wednesday it plans to earmark a combined 5.4 trillion won ($4.5 billion) risk capital to spur venture investments across the nation in 2020.

The company said it aims to raise at least 1 trillion won for its portfolio, adding to the 1.6 trillion won from its flagship fund of funds.

The majority of the funds worth 3.3 trillion won will be used to nurture startups for later-stage funding rounds, K-Growth said. Under the plan, its will team up with the Korea Development Bank and KDB Capital to back a combined 1.2 trillion won, in order for subfunds to extend capital to startups at preunicorn stage.

Another portion of funds worth 1.3 trillion won will focus on corporate restructuring schemes, secondary investments and financial technologies.

K-Growth-backed subfunds will also support manufacturing firms in sectors like semiconductors, materials, components and equipment.

In the meantime, K-Growth declared 2020 as the first year to create project funds -- where it will accept applications on a rolling basis -- diverting from blind-pooled funds-focused strategy.

K-Growth-financed blind-pooled funds will name at least 44 vehicles to manage subfunds this year.

As of end-2019, it created 163 funds worth 15.7 trillion won by backing 3.2 trillion won. Last year, it earmarked a 3.6 trillion won fund with 714.1 billion won backing.

K-Growth manages 11 fund of funds, mainly financed by state-led financial institutions including the KDB, the Industrial Bank of Korea and Banks Foundation For Young Entrepreneurs.

By Son Ji-hyoung (consnow@heraldcorp.com)