News & Media05. 14. 2015 : The Korea Economic DailyLast Year’s Performance of Venture Capitals? … Korea Investment Partners Tops Matchlessly
05.14.2015 The Korea Economic Daily
Last Year’s Performance of Venture Capitals? … Korea Investment Partners Tops Matchlessly
Subsidiary of Korea Investment Holdings, Korea Investment Partners (KIP, President Yer Hyun Baek) hardened its position as the top domestic venture capital with operating profit and net income around \10 billion last year. KIP has been evaluated as the best venture capital because it has made the most new investments every year.
On 7th, the Korea Economic Daily analyzed Year 2014 income statements of 103 domestic venture capitals registered on the Small Business Administration. As a result, KIP has topped the list in all sales performance areas including operating profit, operating revenue, net income, etc.
Subsidiary of Ilshin Spinning Co., Ltd, Ilshin Investment also had an impressive performance such as \16.1 billion operating revenue, \13.4 billion operating profit, and \12 billion net income. However, Ilshin Investment was excluded in this result considering the fact that 90% of its operating revenue goes to its subsidiary (Giordano) as equity method income.
u The only firm with ten-billion-profit in the industry … Impact of investment success new fund creation
Major Venture Capital Performance in 2014
Unit: 0.1 billion
Korea Investment Partners
Mirae Asset Venture Investment
KIP made a record of \37.8 billion operating revenue. This value is \10 billion more than that of the second place (KB Investment, \25.5 billion). The operating profit was \13.4 billion and the net income was \12 billion. KIP is the only one that had ten-billion-won profits in the industry (except Ilshin Investment). Operating revenue and net income have increased about three times than those of the previous year (2013). However, it was not as good as in 2011, when KIP had the highest performance in the venture capital history (\54.1 billion operating revenue, \30.3 billion operating profit).
KIP could have an outstanding performance last year because it killed two birds of ‘investment success’ and ‘new fund creation’ with one stone. As about 10 investee companies including Kakao fairly performed well, gain on disposition of stocks reached \0.53 billion. Through new fund creation, annual fund management remuneration (commission fee) also recorded \0.81 billion, which increased \0.32 billion compared to the previous year (\0.49 billion).
An authority in the venture capital industry explained that “it means a lot that a venture capital, evaluated to have the biggest risk among investment companies, performed net profit of over \10 billion despite the continuous low interest basis,” and “KIP is becoming a role model in the industry because, every year, it performs well in fields such as resultinvestmentfund creation etc., although it spends a lot of money in hiring new personnel and provides innovative incentives.”
u Stic turns around in a year … Traditional strong players such as IMM SBI, etc. also ranks high
The second and third places of operating revenues were KB Investment (\25.5 billion) and Stic Investment (\21.8 billion) each. Yet, KB Investment had more revenue from financial transactions with subsidiaries of KB Finance Group rather than from pure venture investments. Stic Investment, which has high PEF ratio, succeeded in turning around (\0.64 billion operating profit) since it recorded operating loss the previous year.
Subsequently, traditional strong players – such as IMM Investment (\14.6 billion), SBI Investment (\14.5 billion), Partners Investment (\12.5 billion), Neoplux (\12.1 billion), KTB Network (\11.6 billion), Mirae Asset Venture Investment (\11 billion), and Kiwoom Investment (\10 billion) – ranked high on the list. Each of these companies recorded operating profit and net income between \1 billion and \6 billion.
u VC Performance improved thanks to government policies … LB Investment reports unprecedented deficit
General business performance of domestic venture capitals improved compared to that of the previous year. Due to the government’s venture upbringing policy, funds were created continuously and the consequent increase in fixed income such as management fee had a large impact. In addition, the companies successfully retrieved the investment as the ambitiously invested venture companies had IPO and M&A. The operating profits of the top 10 venture capitals increased more than 2 times on average.
Hyung Soo Kim, Executive Director of Korea Venture Capital Association, said “the venture capitals are working more actively as the government clarified promotion of venture investment and hence invested tremendous amount of policy funds,” and predicted that “the performance of the investment companies can improve even more if the divestment market becomes more active.”
Besides, LB Investment, which has been classified as ‘Big 3’ with KIP and Stic Investment, experienced great slump last year. The operating revenue that used to exceed \10 billion dropped to \7.1 billion, consequently placing the company outside of the top 10. In particular, profitability deteriorated as deficit in operating profit and net income shows.