FSC chief vows 'patient capital' supply through ultra-long-term technology fund

Financial Services Commission Chairman Lee Eok-won said Monday that in advanced technology, "it matters not only who can invest the most, but also who can look furthest ahead and wait the longest," as he pledged to actively supply patient capital through a new ultra-long-term technology investment fund.

Lee made the remarks at a public hearing on the ultra-long-term technology investment fund held at Korea Development Bank in Yeouido, Seoul, saying the National Growth Fund "needs to go beyond its achievements to date and actively invest in technologies that require a long time to mature."

The ultra-long-term technology investment fund is an indirect investment vehicle for institutional investors designed to actively support advanced technology sectors requiring long-term patient capital. It extends the fund's lifespan to up to 15 years and reduces the burden on fund managers to raise private capital. The FSC earlier announced in a briefing last week that it would launch the ultra-long-term technology investment fund within the National Growth Fund at a scale of 880 billion won ($593 million) before the end of the year.

While acknowledging the National Growth Fund's track record, Lee said "the global investment war is intensifying, and securing foundational technologies that will shape the future and internalizing core technologies in key industries are essential tasks," explaining the rationale behind the new fund.

Of the fund's total resources, 680 billion won will be covered by the Advanced Strategic Industries Fund (600 billion won) and fiscal contributions (80 billion won), reducing the burden on fund managers to raise private capital. The fund will run for 15 years, with an actual investment period of up to seven years, enabling long-term and sustained investment in technology·companies.

Given that the ultra-long-term technology investment fund represents uncharted territory even for policy finance, the FSC said it will design incentives and other mechanisms carefully in consultation with the market and industry.

Lee said the fund "must grow together with companies," adding that it would consider rewarding fund managers for making additional investments alongside companies and penalizing those who withdraw capital early in a manner inconsistent with the fund's purpose. The technical expertise of key investment personnel will also be a factor in manager selection, as will whether a fund manager employs strong talent and has put in place adequate compensation structures for them.

Lee said that with the launch of the fund, "fund managers who truly understand technology will find promising technologies and stay with them until those technologies translate into industrial results," adding that the FSC would actively support the emergence of specialized fund managers, or KSTPs, with an investment philosophy focused on foundational and core technologies.

The National Growth Fund plans to finalize the fund's operating framework based on feedback from Monday's public hearing and begin the process of selecting a fund manager. Following manager selection and private capital raising, investment is expected to begin as early as the end of the year.