The state-run Export-Import Bank of Korea (KEXIM) will invest in sub-funds of the PIS (plant, infrastructure and smart city) fund in line with the government’s efforts to boost construction and infrastructure industries.
KEXIM’s loan committee recently approved the plan, sources said on Wedneday (July 8). The PIS is a fund of funds launched by the Ministry of Land, Infrastructure and Transport in October 2019. It attracted 600 billion won ($502 million) worth of capital commitments from the government and public institutions.
The vehicle is designed to allocate capital to four underlying sub-funds for investment in the plant engineering, infrastructure and smart city sectors. Three have target sizes of 300 billion won, 600 billion won and 400 billion won respectively, while the fourth closed this spring at 200 billion won. It will target investment opportunities in all three sectors.
KEXIM’s investment will go to the three sub-funds that are still actively fundraising. The bank had initially considered investing in just one of them but then decided to allocate capital to all three funds, probably to set an example as a policy lender, according to sources. The amount of capital committed by KEXIM has not been not disclosed.
“Fundraising for the three underlying funds of the PIS fund is expected to be completed by August as other state-run lenders and domestic institutional investors, such as pension funds and mutual aid associations, are also considering investment in the funds,” an industry insider said.
In 2019 KEXIM’s investment was largely concentrated in the materials, parts and equipment sectors to support the government’s plan to grow companies from these industries. The bank provided funds to Korea Midland Power, which acquired a wind power project in Sweden.
KEXIM also participated in the 2019 acquisition of U.S.-based Momentive Performance Materials by a consortium comprising private equity firm SJL Partners and strategic investors KCC and Wonik QnC. The bank invested 30 billion won in SJL Partners’ MOM 1 Private Equity Fund.
KEXIM is ramping up investment in private equity this year. Apart from its decision to invest in sub-funds of the PIS fund, the bank last month awarded mandates to STIC Investments and InterVest to manage 45 billion won and 30 billion won respectively for investments in domestic pharmaceutical companies seeking to expand into overseas markets.
It also plans to allocate 25 billion won to a fund investing in biotech and healthcare. (Reporting by Byung-yoon Kim)