[Interview] IMM deploying capital with an eye on bio and EV batteries

Finance

Published: 10 Sep. 2023, 15:03 Updated: 11 Sep. 2023, 11:20

[Interview] IMM deploying capital with an eye on bio and EV batteries

IMM Investment CEO Ji Sung-bae speaks during an interview with the Korea JoongAng Daily at the company's office in Gangnam Finance Center in southern Seoul on Aug. 25. [PARK SANG-MOON]

The growth of IMM Investment, a major Seoul-based alternative asset manager, tracks the dramatic rise of Korea's start-up scene.

Few if any unicorn companies had been established when IMM Investment was established in 1999. But the number has now jumped to around two dozens, including Coupang, Bucketplace and Musinsa.

The growth of unicorn companies was often helped by IMM Investment, which invested in them and in some cases is still invested.

IMM Investment has since set its sights on bio, healthcare and electric vehicle (EV) batteries.

"Bio and healthcare will have a competitiveness in Korea, and visible achievements are currently underway," said Ji Sung-bae, CEO at IMM Investment, during an interview with the Korea JoongAng Daily at the fund's office in Gangnam Finance Center in southern Seoul on Aug. 25.

"In the 1990s, all the smart students that studied natural sciences majored in physics or electronic engineering and contributed to developing Korea into an IT powerhouse. Such students are now concentrated at medical schools. They will play a key role in the rapid growth of the industry."

Celltrion and Lunit are some of the bio and healthcare firms in which IMM Investment has invested.

Ji also noted businesses involving EV batteries as new growth engines that will drive Korea's economy.

IMM Investment was founded as a venture capital firm, but has become a multi-asset alternative investment company. It has 6.4 trillion won ($4.8) of assets under management.

"I believe there are a lot more potential unicorn companies to be found in Korea," Ji said.

"Young start-up founders in Korea have great passion and creativity. I consider entrepreneurship, or persistence, as the most important factor when evaluating the capacity of a founder."

Ji, a founding member of IMM Investment, has been CEO since 2000.

He started his career at Samil PricewaterhouseCoopers after studying business at Seoul National University, and was chairman of Korea Venture Capital Association for a year in 2021.

Outside Korea, smart farms and games are some of the areas Ji believes will grow.

IMM is expanding its footprint globally along with the expected growth of opportunities.

It runs offices in Tokyo and Hong Kong, and plans to open an office in Singapore on an unspecified date to increase investment in Southeast Asian countries and India.

Below are edited excerpts from the interview.

Q. What industries do you think will thrive apart from bio?

A. Apart from bio, Korea is also doing very well in EV batteries. It's a trend that cannot be defied since it's a key material that will be used in vehicles that the United States and Europe intend to convert to.

Korean companies, like LG, Samsung and SK, are already doing very well in the EV battery industry. But attention needs to be paid to businesses that come following EV batteries production.

Businesses like recycling the EV batteries that die out is also considerably important. The market for recycling the batteries that have been scrapped in the manufacturing process, not those that have died out, is currently in the burgeoning stage. I believe these technologies have now become more important than making the batteries themselves.

*Reporter's Note: The global scrapped battery recycling market is projected to reach $53.6 billion in 2030 and $174.1 billion in 2040, according to data by Seoul-based SNE Research.

Q. Are there specific industries IMM is focusing on by country?

We consider different businesses that are suitable for different countries. For instance, we invested in a smart farm company in the Middle East. The Middle East region has an environment that isn't suitable to harvest crops, as there are deserts and a hot, arid climate. So a lot of vegetables, like tomatoes, are imported from Europe, pushing up their prices. So we invested in a smart farm company that harvests tomatoes in the Middle East and distributes them in the region.

As for India, we are focusing on the game industry. India has a large population, much of it young. So we've seen huge interest in games in the country. IMM Investment has plans to invest in the industry as India is one of the countries with the largest number of mobile game downloads. We haven't yet made any investments, but it is definitely a market we're paying attention to considering its growth potential.

Q. What do you think of the current market? Is it recovering?

Total investment in venture capital in the first half of this year wasn't as big as in the same period last year. That was due to global economic uncertainties.

The biggest enemy to alternative investment firms is interest rates. We invest using our funds but also raise funding from the limited partners. They will invest less through us if high interest rates are projected to persist, since alternative investment is considered more dangerous than bonds or stocks.

But things started to pick up from the second half, as people began to see the end of the rate increases. More funds flowed into the alternative investment market in the second half compared to the first, a period I believe was the lowest point. The amount is expected to grow in the third quarter.

Q. Are there any regulatory hurdles that you think should be eased to boost Korea's investment market?

There are some unseeable regulatory hurdles.

For instance, we once invested in a drone company. To develop drones, they need to be flown and tested. But the law barred flying drones unless they are tested on a rooftop that is covered with a net.

In another instance, there was a CEO of a start-up that provided a moving crematorium service for pets, since pets have to be cremated by law in Korea. But the service was not allowed.

It would be easier for a diverse range of start-ups to be developed if the government eases these regulations.

Q. What are IMM Investment's strengths in the market?

IMM's biggest strength is that we offer investment in companies that are in different stages of development, from venture capitals to those that have reached a certain level of growth. We also have the systematic conditions to make overseas investment, including workforce and networks.

IMM has 20 overseas workers, and we joined the Japan Venture Capital Association (JVCA) last December. JVCA is a trade association that caters to the venture capital industry, and we were able to enter the inner circle of the local start-up market. In the Seoul office, we established Alternative Capital Markets, dedicated to overseas investment, in 2021.

We made a total of 229.7 billion won in overseas investment in the first half of 2022, the largest amount by any venture capital firm based in Korea.

BY JIN MIN-JI, PARK EUN-JEE [jin.minji@joongang.co.kr]