The Ministry of SMEs and Startups (Minister Han Sung-sook, hereinafter referred to as the Ministry of SMEs and Startups) announced on the 28th (Thursday) through the ‘LP First Step Fund Investment Notice’ that the mother fund and the pension fund investment pool (Trade Insurance Fund) will jointly invest 40 billion won.
The 'LP First Step Fund' is a fund newly established this year to encourage participation in venture investment by institutional investors such as pension funds and financial institutions that have no experience in investing in venture capital funds. It is characterized by the fact that the mother fund provides enhanced incentives such as preferential loss reserves, excess profit transfer, and equity purchase rights, and the initial investor freely sets the investment field.
Building on these advantages, the Trade Insurance Fund, which manages a portion of its surplus assets through a pension fund investment pool, has made its first venture fund investment. This marks the first venture investment since the pension fund investment pool system was introduced in 2001 to efficiently integrate and manage pension funds' surplus assets.
The 'LP First Step Fund' was established on August 18 after discussing the investment suitability of the pension fund investment pool through the 'Investment Pool Management Committee (7.22)' and going through deliberation and resolution by the Asset Management Committee of the Korea Trade Insurance Fund, the investor.
The Korea Trade Insurance Fund and the Mother Fund contributed KRW 20 billion and KRW 20 billion, respectively, to establish the mother fund. Through this investment, the company plans to select a subsidiary fund manager worth KRW 57 billion. The subsidiary fund plans to focus its investments in the "secondary" sector, reflecting the investment needs of the initial investor, the Korea Trade Insurance Fund, and is expected to contribute to the revitalization of the recovery market.
Minister Han Seong-sook said, “Venture funds are a key means of ‘productive finance’ that support growth by investing in innovative ventures and startups and distribute the fruits of growth as profits to investors.”
“Despite investing primarily in areas with high public interest, the Mother Fund has achieved stable returns of over 8%* on average per year and over 10% over the past five years, proving that pension funds and other surplus funds can be a useful means of generating stable returns,” he said.
In addition, he stated, “As this ‘LP First Step Fund’ has opened the door for pension fund investment pools to transform into productive finance, the mother fund will strengthen its role as a ‘venture investment platform’ so that more public and private surplus funds can flow into the venture investment market.”
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