KDB to invest in pre-IPO startup The Korean state-run bank to participate in a food startup’s pre-IPO funding round

Translated by Ryu Ho-joung 공개 2020-03-10 08:00:38

이 기사는 2020년 03월 10일 08:00 더벨 유료페이지에 표출된 기사입니다.

Korea Development Bank (KDB) plans to participate in a pre-IPO funding round of Farm8 Co., Ltd., a supplier of eco-friendly food products, as part of its continued effort to expand the country’s venture capital ecosystem.

The state-run bank approved a five billion won investment in Farm8, the IMM Investment-backed food supplier preparing for a pre-IPO funding round, sources close to the matter said on March 5.

The investment will be handled by Scale-up Banking Department under the bank’s Venture Finance Center which was newly created after a restructuring late last year. The restructuring was done to better align the bank’s organization with the government’s policy of economic growth by encouraging innovation.

The newly created center consists of three departments: Scale-up Banking Department, Venture & Technology Banking Department and KDB Next Round Department, among which Scale-up Banking Department is in charge of investing in innovative startups and potential unicorns as well as identifying and providing capital to startups with promising ideas to turn them into unicorns, and thereby ultimately raising the country’s growth potential and creating more jobs.

KDB previously also invested in Kurly, which operates online grocery store Market Kurly, and n.thing Inc., a smart farm startup.

“KDB’s Scale-up Banking Department was set up to invest in companies with a competitive edge in innovative growth industries and businesses that have potential to grow globally. It also provides capital to companies with a business model that can result in rapid job creation or help the country’s venture capital ecosystem grow,” an industry insider said. “In particular, the department focuses on domestic food and agricultural companies with promising growth prospects to facilitate growth in the sector.”

Other investors in the Farm8’s upcoming funding round include Shinyoung Securities and Gentium Holdings: A combined three billion won will be invested through a project-specific fund jointly launched by the two firms. Several domestic venture capital firms as well as domestic and international strategic investors are reportedly considering participating in the startup’s financing round, too.

IMM Investment, the largest shareholder in Farm8 with a 46.37 percent stake, is expected to reach its fundraising target of 15 billion won without difficulty. The food startup plans to use the proceeds to increase its production capacity and expand its business.

IMM Investment also plans to exercise its option to convert Farm8’s convertible notes to common stock in an effort to improve the company’s capital structure. The company has 10.8 billion won of convertible notes outstanding as of the end of December 2019.

Such a move is likely part of an effort to strengthen the company’s fundamentals ahead of a planned IPO. IMM Investment hired Samsung Securities to lead the IPO of Farm8, aiming to list by 2022.

Farm8’s revenue almost doubled to 47.3 billion won over the past three years to the end of 2019. EBITDA nearly quadrupled to 2.3 billion won year-on-year.

(By reporter Kim Byung-yoon)
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