Dongkuk Investment, the corporate venture capital arm of Dongkuk Steel Mill Group, is moving to raise its second blind fund, targeting 75 billion won ($51.7 million) — just over a year after closing its first. The new fund will broaden the group's investment reach into AI-driven manufacturing transformation, robotics and advanced materials, as the conglomerate seeks new growth engines beyond its steel-centered business portfolio.
Dongkuk Investment announced Thursday that it has set the target size for "Dongkuk Future Growth Venture Fund 2" at 75 billion won. That is 7.5 billion won more than the 67.5 billion won raised for Fund 1 last year.
Group affiliates will contribute 45 billion won, or 60 percent of the total. The remaining 30 billion won is to be secured from outside investors, including policy finance institutions and private backers. Dongkuk Investment plans to participate in policy finance institution commitment programs in the second half of this year to attract outside capital, with a target of completing the fund close after December.
A blind fund pools capital before identifying specific targets, leaving the manager to select and invest in companies afterward. That structure places greater weight on the manager's ability to source deals and exercise investment judgment than a project fund, which locks in targets in advance.
Lee Hwan-young, Dongkuk Investment's newly appointed CIO, will serve as lead fund manager for Fund 2. Lee joined the firm on July 3 and brings 24 years of venture investment experience, having previously worked at Premier Partners, Stonebridge Ventures and Hyosung Ventures.
Over the past five years, Lee focused on identifying companies in AI and AI transformation, known as AX. He brings hands-on investment experience spanning both manufacturing AX — applying AI directly on the factory floor — and the materials, parts and equipment companies that support it.
Dongkuk Investment plans to cast a wider net with Fund 2 than it did with Fund 1. The firm has designated AI and AX as its core focus, with robotics, AI infrastructure, advanced materials and AI-driven biotech rounding out the target investment categories. AX refers to the use of AI to restructure production and business operations.
The firm intends to evaluate companies not merely on their potential as trading partners for group affiliates, but also on their standalone growth prospects and exit potential. Manufacturing AI-related materials, parts and equipment companies could also offer linkages to Dongkuk Steel Mill Group's steel production operations.
"We aim to support the venture ecosystem through fund management while at the same time improving the parent company's business portfolio," Lee said. "From a medium- to long-term perspective, we want to build a virtuous cycle that maximizes fund returns and become a role model in the CVC industry."
Dongkuk Investment is the CVC of Dongkuk Steel Mill Group, registered as a specialized credit finance company in August 2024. The firm is led by CEO Bae Chang-ho, who spent 17 years at Shinhan Capital managing venture funds and proprietary investment after earlier stints at SBI Investment Korea.
About a year after its founding, Dongkuk Investment closed its first blind fund — Dongkuk Future Growth Venture Fund 1 — at 67.5 billion won, more than double the minimum target it had originally set.
The key challenge for Fund 2 will be securing the 30 billion won in outside commitments. Winning recognition from policy finance institutions and private investors — beyond the backing of the parent and its affiliates — is essential to scaling the fund as planned. Identifying investments that can simultaneously advance the group's medium- to long-term new business development and deliver financial returns will also be a critical task.
The group's core steel business has also been recovering. Dongkuk Steel Mill posted operating profit of 45.6 billion won in the second quarter of this year, up 52.3 percent from a year earlier, driven by demand from large-scale industrial infrastructure projects including AI data centers. Dongkuk Coated Metal returned to the black in the same period, recording operating profit of 21.1 billion won.
With steel affiliate profitability rebounding, Dongkuk Steel Mill Group is expanding its venture investment at the same time — pursuing a dual strategy of strengthening its existing businesses while building new growth drivers outside steel.
kwater@heraldcorp.com
