[Sponsored Report] Korea Development Bank invest in SMEs

KDB has launched a one-trillion-won fund called the “KDB Pioneer Program” to support venture and small- and medium-sized companies that can potentially grow into global companies.

Korea Development Bank recently announced that it has raised 1 trillion won for its KDB Pioneer Program to support venture and small- and medium-sized companies that could potentially grow into global companies. The fund will be used to help these companies operate one year or until the fund used up.

According to this program 300 billion won will be used to support early business stage companies that are in their third or seventh year of business as long as they have total sales of less than 3 billion won. The remaining 700 billion won is for the venture and small- and medium-sized companies that are in the development and maturing phases. As far as companies that have only recently started it will apply a separate evaluation method and support those who have the technology but lack financial support.

The first reason behind the KDB Pioneer Program is to help companies that have the potential to be future leaders in their respective industries and support the co-development of conglomerates and small- and medium-sized companies to secure a new driving force of Korea and also contribute in creating high quality jobs.

In the past, Korea has achieved rapid economic development and conglomerates have acquired a global level of competitiveness, but the overall industrial ecosystem competitiveness including small-and medium-sized companies is still weak and the development rate is also decreasing. Therefore raising companies that can contribute to a new driving force and a new cooperative relationship between conglomerates and the small- and medium-sized companies were necessary. In this regard, KDB is leading the venture companies and small- and medium-sized companies by supporting them through the new KDB Pioneer Program and the current KDB co-development program.

Secondly KDB is increasing its role as a corporate investment bank (CIB) and improving the country’s competitiveness by utilizing the 1 trillion won of net profit of the first half. Bringing out the pioneer character of the bank, it plans to contribute in raising the country’s competitiveness and at the same time create new future customers by helping them in the initial stages of business instead of trying to take away customers from other banks. This will help secure future profit sources.

KDB has decided to increase its internal raised fund scale for the KDB co-development program that began operating from the end of June, to 200 billion won. This program includes the low interest co-development fund loan.

The co-development fund loan is a system where funds raised by conglomerates’ deposits and the bank’s internal fund is matched. It is used for low-interest loans to small- and medium-sized subcontractors.

The bank will be receiving subcontractor recommendations from conglomerates so it can also expect to expand its clients. KDB has already signed an agreement with 4 conglomerates and raised 123.2 billion won that will be used for loans to small- and medium-sized companies. KDB plans to increase this fund in the future.

Kim Young-kee, the vice chairman of KDB, said, “The two track program has our strong will to actively support small- and medium-sized companies. The pioneer program is a system to raise our future clients and the co-development program is a system supporting epigyny development covering conglomerates and subcontractors. In the future we hope this can contribute in upgrading the level of business and financial ecosystem.”

By Lee Ji-hyun [concordia@joongang.co.kr]