The Korea Exchange announced on the 30th that it has agreed to establish a "secondary (existing share trading) fund" in collaboration with securities-related institutions such as Korea Securities Finance, the Korea Securities Depository, and KOSCOM, aimed at fostering an ecosystem for the growth of venture and innovation companies.
The establishment of this fund was funded through internal resolutions by each institution to support the government's policy of strengthening productive finance.
A secondary fund is an indirect investment fund that acquires existing shares or fund investment stakes in unlisted venture and innovation companies held by existing investors such as venture capital (VC) firms and private equity funds (PEF), thereby generating returns. It assists early-stage investors in recovering their capital in the Korean venture market environment, where initial public offerings (IPOs) take a long time to complete and mergers and acquisitions (M&A) or over-the-counter trading are not yet active.
The secondary fund established by the Korea Exchange and related institutions will be formed at a scale of approximately 1 trillion won over three years, intended to complement existing venture capital exit markets such as IPOs.
A Korea Exchange official stated, "The secondary fund will serve as a reliable relief pitcher for the venture industry, which is suffering from a lack of liquidity," adding, "We expect it to lay the foundation for the sustainable growth of innovative venture companies and contribute to the innovative growth of the national economy."
As a result, a total of approximately 2 trillion won in funds is expected to flow into the venture exit market from the financial investment industry. On the 31st of last month, the Korea Financial Investment Association and the securities industry announced plans to jointly promote venture secondary investments at a scale of 1 trillion won over three years.
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