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| The headquarters of National Pension Service located in Jeonju / Yonhap |
By Anna J. Park
The National Pension Service (NPS) will hold assets in its venture capital portfolio estimated to exceed 1 trillion won ($840 million) by the end of the year. This is the first time the NPS’s venture assets will exceed this level, since it began investing in the venture capital market in 2002.
According to local investment banking sources, the NPS has made more than 500 billion won venture capital investments so far this year, more than double previous investments of 200 billion to 300 billion won. With the increased riskier investments, the venture capital assets total held by the NPS will be increased by more than 10 percent from last year’s 910 billion won.
Due to its penchant for stable long-term profits, the national pension provider’s proportion of venture capital investments, which tend to be high-risk and high-return, had remained at minuscule levels over the past decades.
This cautious approach is changing as the fast growth of some of Korea’s home-grown unicorn companies has brought the NPS major investment jackpots lately.
Although 1 trillion won in venture investments is still much less than 1 percent of the NPS’s 900-trillion-won total assets, a recent string of successful IPO exits, as well as local unicorn companies’ impressive growth rates, are attributed to its growing open-mindedness towards venture capital investments.
Global leisure reservation platform Yanolja is one successful investment case for the NPS. In 2017, SkyLake Investment ― the operator of a private equity fund (PEF) which the NPS invested in ― invested 60 billion won in Yanolja, when its corporate value was slightly over 500 billion won. The value of the leisure reservation platform company has grown more than 20 times in the last four years.
The NPS also invested in one of IMM Investment’s venture funds a couple of years ago, which reaped more than five times its original principal, with its successful exit from global game company Krafton’s IPO earlier this year.
The NPS also holds shares in one of LB Investment’s venture funds that invested in the local Medical AI firm, Deepnoid. The fund expects returns of more than three times the original investment. Atinum Investment’s venture fund is also expected to bring a return of more than five times its investment.
Market watchers say the key reason behind the NPS’s success record in venture capital investments has been its strict process of selecting reliable, quality venture capital firms or private equity firms.
The NPS is currently planning additionally to select four different venture capital investment firms by November, through which the pension provider will invest some 150 billion won. The pension service is also planning to deploy venture capital experts into its internal advisory investment group to heighten transparency and expertise in this field.
NPS’ venture capital investments to exceed 1 trillion won
Source: Buhay Kapa PH
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