The government will set up a 1 trillion won (US$918 million) fund to restructure struggling small and medium enterprises, officials said on Dec. 18.
Under the scheme, eight state-run and retail banks, including Korea Development Bank, will raise 500 billion won by the end of next February as a so-called “mother” fund, the Financial Services Commission said in a statement.
The remaining 500 billion won will be raised from private investors, mostly private equity funds, as “baby” funds, the FSC said.
The so-called “mother-baby” fund structure is aimed at encouraging more private investors to join the corporate restructuring market, breaking away from government-spearheaded responses to developments that have been the norm in the past, according to the statement.
Without an intervention by the “mother” fund, each “baby” fund will be allowed to choose its investment target, the FSC said.
By Alex Lee and newswires (firstname.lastname@example.org