National Participation Fund, sold out in 5 days of launch... 600 billion won more to be sold in Q3

The 'National Participation National Growth Fund,' designed to support advanced strategic industries, has generated significant public interest, leading to the rapid sell-out of its initial offering. The fund, which features government backing to cover up to 20% of potential losses, was initially intended for a three-week sales period but was fully subscribed within just five business days.

In response to this overwhelming demand, the Financial Services Commission announced plans to release a second tranche of 600 billion won in the third quarter. This move aims to further channel investment into key industries. Since its launch on May 22, the first fund offering saw its limits exhausted quickly, with some securities firms' non-face-to-face offerings selling out within 10 minutes of opening.

The success of the fund is largely attributed to the government's commitment to absorb a portion of the financial risk. For the upcoming second tranche, 120 billion won in government funds will again be allocated to cover initial losses. Investors will also continue to benefit from tax incentives, including income deductions and separate taxation on dividends. The fund operates by pooling public investments into 10 sub-funds, which then invest in companies, with the government's participation as a subordinated investor providing a crucial layer of security.

To ensure responsible management, the Financial Services Commission is strengthening oversight mechanisms. Sub-fund managers are now required to invest at least 1% of the fund's total value as a subordinated stake, meaning they will share in any losses. Furthermore, asset management reports detailing the performance of both public funds and individual sub-funds will be disclosed quarterly. Incentives are also in place to encourage strong performance, with bonuses for exceeding a 30% cumulative return over five years. Additional bonuses are offered for managers who invest over 40% of new capital in unlisted companies or KOSDAQ-listed tech firms, or who achieve over 40% investment in non-metropolitan regions.

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As the National Participation Growth Fund launched in May was quickly sold out due to the public's high interest, we plan to launch a second fund worth 600 billion won in the third quarter.