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Venture capital

GS launches corporate VC firm

Regulatory change allows holding companies in South Korea to establish and own financial arms

By Jan 09, 2022 (Gmt+09:00)

GS Tower, located in Seoul's Gangnam District 
GS Tower, located in Seoul's Gangnam District 


GS announced the establishment of a corporate venture capital (CVC) firm Sunday, the first of its kind for a holding company in Korea. The announcement comes just 10 days after the South Korean regulatory body eased its regulations on holding companies owning financial arms. 

The newly launched GS Ventures will add weight to the “New-to-Big” strategy of GS Group Chairman Heo Tae-soo. 

CVC FOR EMERGING TECH 

During Sunday’s general meeting held in Seoul’s GS Tower, Vice President of GS Heo Jun-nyeong was named the new company's CEO. Heo previously led corporate mergers and acquisitions at Seoul-based Mirae Asset Global Investments Co. and at UBS Group AG's New York office. 

GS Ventures is a wholly owned subsidiary of GS, the holding company of GS Group, which invested 10 billion won ($8.4 million) into the new initiative. 

GS Ventures will set up a fund in which GS Holdings and its affiliates are poised to invest in local startups that focus on industries with high growth potential. Such sectors include biotech, renewable energy, and resource recycling. The CVC will pay particular attention to early stage investments and will collaborate with other GS affiliates for later-stage funding.  

The Financial Services Commission has yet to officially approve GS Ventures. While it is customary for the financial watchdog to take about five months to approve an application, industry insiders expect a speedier-than-usual process as the goal of the regulatory change is revitalizing the venture capital sector. 

A GS employee with knowledge of the procedure said “[We] expect the first round of investment to be completed within the first half of this year, including the approval and creation of funds.”

GS previously focused on the energy and commerce industries. Since Heo Tae-soo took the group's helm in 2020, however, the company has been on the offensive to expand its foothold in emerging technologies. 

Heo has been quoted as saying investment in and collaboration with innovative startups is key to future growth.

Heo Jun-nyeong was named CEO of GS Ventures on Jan. 9
Heo Jun-nyeong was named CEO of GS Ventures on Jan. 9

EASING OF REGULATIONS 

Holding companies in Korea were banned from owning financial firms in the past – in line with the country’s law of separating industrial and financial capital. 

Effective Dec. 30, 2021, The Korea Fair Trade Commission changed its regulations to allow holding companies to establish and own CVCs. This followed criticism that overseas conglomerates are actively participating in venture capital firms. 

An industry insider told The Korea Economic Daily that global CVC investment volume increased 133% on-year in 2021. “The easing of regulations is sure to give a much-needed boost to the [domestic] venture capital ecosystem,” the expert said. 

Write to Jeong Min Nam at peux@hankyung.com

Jee Abbey Lee edited this article.
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