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Eyes on who will receive funding from KDB Much attention focused on a league for funds targeting mid-sized companies

Translated by Ryu Ho-joung 공개 2020-03-12 08:00:04

이 기사는 2020년 03월 12일 08:00 더벨 유료페이지에 표출된 기사입니다.

Korea Development Bank (KDB) has unveiled on Tuesday the list of PE and VC firms that applied for roles as an external manager in an investment program, which is led by the state-run bank as part of the government’s effort to empower the growth of the country by helping grow small and mid-sized businesses.

Through the investment program, nearly 900 billion won will be invested in funds with a focus on the country’s mid-sized companies and startups spanning all stages of venture capital. It is split into five leagues based on a target’s growth stage. Among them, drawing much attention is a league for funds targeting mid-sized companies where more than 30 percent of the total amount to be invested, or 270 billion won, will be allocated.

According to KDB, three firms – SkyLake Investment, H&Q and JKL Partners – submitted proposals for this league where ultimately only two firms will be selected. Their competition to receive funding is expected to be fierce as the race looks to have become a matter of pride for them.

It is also worth to notice that the number of applicants for this league is less than twice the number of available spots, which is typically the minimum threshold set by most of the domestic pension funds and mutual-aid associations to proceed with their process of selecting external managers. KDB, however, plans to move ahead with the selection process – a move that contrasts with other domestic institutions.

For example, the Military Mutual Aid Association (MMAA), in its latest process for selecting outside managers, decided to combine two categories into one as the number of proposals received for a large-cap category couldn’t meet such a threshold. Last year, the Scientists and Engineers Mutual Aid Association (SEMA) also removed a rookie league, which the association first introduced in that year in an attempt to give more opportunities to young PE firms, for the same reason.

“Selecting external managers from fewer applicants is actually a much more difficult job,” a representative from KDB said. “We will thoroughly evaluate PE firms competing in a league for the mid-market strategy.”

It is considered highly likely that SkyLake Investment and H&Q could be chosen among three firms that applied for the league. Those selected to receive funding need to close a fund worth up to 500 billion won by the end of October.

SkyLake Investment is working on raising capital for its 11th blind-pool fund with a target fund size of 500 billion won. It secured 100 billion won from the Korean Teachers’ Credit Union (KTCU) last summer and is reportedly tapping investors with an aim of closing the fund by the first half of the year.

H&Q is also in the process of raising capital, with an aim of closing its fourth blind-pool fund worth up to 600 billion won by June. It obtained capital commitments from several limited partners including the National Pension Service (NPS) and the Public Officials Benefit Association (POBA), securing capital equal to more than 50 percent of the target fund size.

Meanwhile, JKL Partners just started a new fundraising process, with no capital commitments secured yet. The firm aims to raise about 680 billion won for a new fund, a similar size to its predecessor which deployed more than 60 percent of committed capital after the firm’s latest investment in Yulkok, an aerospace and defense spare part supplier.

KDB plans to review proposals submitted, organize presentation competition and conduct due diligence on shortlisted managers over the coming weeks. The final results are expected to be announced at the end of April.

(By reporters Kim Byung-yoon, Rho Ar-rum and Choi Ik-hwan)
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