Korea Development Bank, Industrial Bank of Korea launch W120b pre-IPO fund

Korea Development Bank and Industrial Bank of Korea have jointly established a 120 billion won ($86.7 million) fund to channel growth capital into innovative companies preparing to go public. The initiative extends collaboration between the two policy lenders beyond co-investment into direct joint management, with the aim of supporting pre-IPO companies as they scale up and enter the capital markets.

The two banks announced Tuesday that they and their affiliates had formed the KDB-IBKS Next Stage Fund.

Each side contributes 60 billion won. On the KDB side, Korea Development Bank puts in 50 billion won as general partner, while KDB Capital contributes 10 billion won as limited partner. On the IBK side, IBK Securities invests 10 billion won as general partner and Industrial Bank of Korea contributes 50 billion won as limited partner.

Korea Development Bank and IBK Securities will co-manage the fund, combining KDB's corporate finance and investment expertise with IBK Securities' IPO and capital markets capabilities. The fund will support portfolio companies from initial sourcing through value enhancement and listing preparation.

The fund's primary targets are pre-IPO companies and high-growth innovative firms — specifically those that have already signed an underwriting agreement or are aiming to list within three years.

The fund is a follow-up initiative under the Policy Finance Institution Council, which launched in March. It builds on the earlier joint Policy Finance Institution Global Scale-up Cooperation Fund backed by the three major state-run banks, broadening inter-agency cooperation from co-investment into co-management and direct joint investment.

Industrial Bank of Korea plans to follow the pre-IPO fund with a post-IPO fund targeting already-listed companies. Over the next three years, the bank aims to assemble a total of 500 billion won in related funds to expand capital supply across different stages of corporate growth.

A Korea Development Bank official said the fund was designed to push collaboration between policy lenders beyond simple co-investment into direct joint management, and to strengthen the bank's role as a catalyst for channeling growth capital to innovative companies and attracting private investment.

An Industrial Bank of Korea official said the fund is part of the bank's task force working to revitalize the Kosdaq market, and that the bank plans to build a total of 500 billion won in funds over the next three years. "Following this pre-IPO fund, we will continue to expand capital support for innovative companies at each stage of growth by adding a post-IPO fund focused on listed companies," the official added.

Meanwhile, policy lenders have been broadening their investment functions beyond loans and guarantees to supply equity capital directly to innovative companies and strategic technology sectors. The government also plans to channel up to 10 trillion won over the next five years through Korea Strategic Technology Partners, a dedicated investment manager for national strategic technologies.