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Brisk Organization of Venture Investment Funds Induce Overseas Capital   


SMBA revealed that its support activities for organization of venture funds to induce foreign capital and to diversify venture capital investment resources and globalize venture firms are achieving substantial.

Consequently, SMBA said that it expects investments in competitive small and medium-size venture firms to be come more brisk. Since last year, SMBA has promoted the support activities intensively.

On a 40 billion won-scale fund (foreign capital inducement: 20 billion won), AJUIB Advanced Materials Fund (operator: Aju IB Investment Co.) was organized with its general assembly on August 3.

This fund, in particular, marks the first time for Solvay, a global chemical company based in Belgium, to make an equity investment of 20 billion won in accordance with its MOU for cooperation concluded with Korea Venture Investment Corp. (KVIC) in April this year, in which the Korea Fund of Funds participated with investment of 10 billion won in the form of occasional equity investment method.

With the present results as a start, organization remaining two more foreign investment inducement funds, which have been selected by the Korea Fund of Funds as targets for occasional investment, also are expected to gain further momentum.

The expectations of Solvay, which is participating as a foreign investor in the fund, regarding Korea's technological potential are so great that it is planning to establish an electronic materials and new & renewable energy-related R&D center in Korea as a new business R&D hub. Through its equity investment in the fund, Solvay is seen as an important strategic partner in identifying excellent new-tech raw materials firms in Korea.

CEO Yang Jung-Kyoo of Aju IB Investment expressed his feelings by saying, "The AJUIB Fund is a fund successfully raised by the foreign capital inducement activities of SMBA and the Korea Fund of Funds. We will do our best to ensure that the AJUIB fund becomes a model for fund operation through foreign investment inducement by intensively investing in excellent SMEs in advanced parts and materials industries at home and abroad as a strategic partner in concert with our overseas investor."

On July 22, meanwhile, KVIC, following its investment examination, approved a 10 billion won equity investment in IDG Ventures Korea Fund 2, which decided to induce a US$20 million-scale fund from a U.S. information & communication-specialized investment company. This year among the affiliate funds of the Korea Fund of Funds, the number of investment cooperatives to induce overseas capital increased to three. A combined 132 billion won is expected to be raied by investment cooperatives with inducement of a total of 755 billion won in foreign funds.

IDG Ventures Korea Fund 2, which will be organized in mid-August on a 42 billion won scale, plans to invest intensively in new enterprises in domestic IT fields like IT, broadcasting convergence, excellent software content, etc. utilizing its overseas investment experience. The fund intends to support marketing and management strategies through utilization of its global networks, providing opportunities to grow into global enterprises.

The KIF-Capstone Investment Cooperative (operator: Capstone Partners), in which the Korea Fund of Funds promised to make an equity investment in early July, plans to organize a fund on a 50 billion won scale after receiving investment of 24.5 billion won from a Chinese global Internet-specialist targeting investment in wireless, IT and games-related firms as new changes emerge in the trends of these industries.

Investment by foreign capital in domestic venture funds, which rose to 90 billion won in 2008, dropped sharply to 23.2 billion won in 2009 due to the aftereffects of the global financial crisis. This year, however, foreign capital joint investment with the Korea Fund of Funds alone is expected to exceed 100 billion won.

Cited as the reasons that foreign capital inducement has become so brisk this year are not just the nation's efforts made for foreign capital inducement, including conclusion of MOUs between SMBA and KVIC and overseas institutions for cooperation in foreign investment since last year, but also the drastic improvement in the equity investment method, expanding the equity investment amount from the Korea Fund of Funds to 25% if foreign capital accounts for 30% or more of the total fund organization amount. This measure was introduced to address the rigidity of the occasional equity investment system, which had been operated under a ceiling of one billion won, for establishment of the Korea Venture Federation (KVF).

In addition to Solvay, KVIC also concluded an MOU with Seoul City to cooperate in the inducement of Global Bio Medical Fund and an MOU with a Japanese investment company. Therefore, cooperatives with a 130-billion-won scale are scheduled to be organized with inducement of 30 billion won in foreign investment and venture funds with a total of 260 billion won in foreign capital are expected this year.

KVIC CEO Kim Hyung-Ki said, "Recently, domestic small & medium and venture enterprises are attracting attention from international investors gradually regarding their growth potential. Carrying out a hub role in inducing foreign capital for venture investment, the Korea Fund of Funds is continuing utmost efforts to create an investment environment in which our domestic small & medium and venture enterprises can be reborn as hidden global champions."


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