The Korea Export Import Bank (KEXIM) took a step toward fulfilling its mandate to finance Korean companies’ overseas expansion by seeking managers for a new ₩400 billion (US$328 million) fund.
Known internally as the Global Bio-healthcare-KFund (GBHKF), it will finance health care companies in the immunotherapy, gene therapy, health care systems, diagnostic kits and medical devices sectors during its five-year investment period, which may be extended depending on circumstance. The funds are aimed at allowing companies to increase their competitiveness overseas by exporting more products and obtaining more foreign investment.
“Amid the global COVID-19 pandemic, Korea’s diagnostic technologies, medical systems and ICT-based disease modeling systems are garnering international attention,” KEXIM’s chief executive and chairman, Moon-Kyu Bang, said April 6. “[The funds] will bolster funding to Korean bio-companies and help them take an initiative in the global market.”
Explaining the pandemic’s role in the fund’s genesis, a company source told BioWorld that “KEXIM has had a strategic focus on its fund’s investments in high-value-added sectors, such as bio-health care, information and communications technology, amongst others. We hope to take part in the global efforts to tackle COVID-19 with our investment.”
KEXIM’s investment comes as COVID-19 continues to focus attention on the health care sector, and especially on testing. Korea has been leading the charge, with 468,779 tests performed as of April 9.
The country’s Ministry of Food and Drug Safety, in conjunction with the Korea Centers for Disease Control and Prevention (KCDC), has approved five test kits under its urgent use license so far.
KEXIM will select up to three managers to manage GBHKF. The bank posted application forms on its website on April 3 and has set an April 17 deadline for submissions. Applicants are required to have more than three years’ experience in forming and managing a private equity fund, as well as a fund amount of more than ₩100 billion as of April.
The source declined to reveal how many applications KEXIM has received so far.
Submitted applications will be subject to a preliminary evaluation, with qualified applicants proceeding to a second, presentation-format round. Companies will be evaluated on their qualifications, the number of employees in their fund management teams and their operational strategy. KEXIM will select the managers in May, with the fund to be created within six months of the selection date.
The selection process will be delayed to the later part of the year if KEXIM is only able to select one or no managers next month.
As a state-run organization, KEXIM will then seek approval from the Minister of Economy and Finance once the managers are selected, and will finalize the investment amount.
Of the fund’s ₩400 billion pool, up to ₩300 billion will be allotted to small-medium enterprise, or SMEs, and ICT-based medical companies. The remainder ₩100 billion will be invested in venture companies in the pharmaceutical and medical device sectors.
KEXIM is looking to contribute a total of ₩100 billion, with the appointed managers to stump up the remainder.
Despite the economic uncertainty caused by COVID-19, the source said KEXIM would “continue to support Korean companies with [KEXIM’s] investment in ICT-based medical and pharmaceutical sectors, which will hopefully lead to continued private sector investment.”
The bank is also implementing other programs totaling ₩20 trillion to help Korean companies facing economic difficulty due to COVID-19. Programs include extending the maturity dates of existing loans for up to a year, loans for SMEs, emergency loans and financial guarantees.
On April 9, Bank of Korea Governor Ju-Yeol Lee predicted that the country’s economy was unlikely to grow by more than 1% this year. He also said the central bank would keep the benchmark interest rate at 0.75%.
KEXIM is looking to put its money to good use this year. As well as investing in the health care and pharmaceutical sectors, it is also looking to place a total of ₩575 million in direct or indirect investments in the IT, overseas infrastructure and shipbuilding industries, among others.