POSCO Group to launch $59 mn fund to drive new growth ventures

[Courtesy of POSCO]

POSCO Group, owner of South Korea’s biggest steel mill, plans to establish an 80 billion won ($59 million) corporate venture capital (CVC) fund to explore new growth opportunities in various sectors, including steel, secondary battery value chain, energy, and food.

According to industry sources on Wednesday, the board of POSCO Holdings Inc., the parent of POSCO, approved a plan Tuesday to invest about 80 billion won in the CVC fund to explore new growth opportunities.

The fund will be formed by the group’s POSCO Capital as the general partner (GP), with sole investment from POSCO Holdings.

The fund is worth 81 billion won, making it the largest among the CVC funds in which POSCO Holdings has independently invested. Apart from POSCO Holdings, POSCO Capital will invest 10 billion won. The fund is expected to be launched in January next year.

A CVC fund refers to a venture capital fund established and held by companies to invest in alignment with their business strategies.

CVC funds are of growing significance as unlike venture capital, whose purpose is seeking financial returns, they focus on fostering technology companies in line with the parent company’s goals, expanding company growth, and exploring potential mergers and acquisitions possibilities.

There is a growing trend in calls for regulatory easing to encourage corporate investments.

POSCO Group has been recognized for its outstanding CVC investment performance.

In 2010, the group raised 100 billion won from its subsidiaries and established POSCO Family Strategy Fund to secure funds for nurturing businesses. In 2019, POSCO independently invested 50 billion won in the first POSCO GEM Fund.

The POSCO GEM Fund focused on nurturing companies in areas such as secondary batteries, chip materials, components, and equipment, among others, where the group has been actively involved.

One of the representative examples is TEMC Co., a producer of semiconductor specialty gases. TEMC, in which POSCO’s fund holds a major stake, successfully went public in January.

Meanwhile, the group’s trading arm, POSCO International Corp., announced Wednesday that it signed a contract with Lotte Energy Materials Corp for the supply of raw materials for copper foil.

Under the agreement, POSCO International will supply a total of 600,000 tons of raw materials for copper foil to Lotte Energy Materials until 2033.

The expected sales, based on the market price, amount to 6 trillion won. Copper foils are material used to encase anode materials for secondary battery production.