Korea’s State-Backed AI Fund Draws Slower Demand in Second Retail Offering
A 600 billion won retail offering tied to Korea’s National Growth Fund opened with softer demand than its first round, as recent market losses and revised eligibility rules tempered investor enthusiasm.
A second retail offering of a South Korean government-backed fund focused on artificial intelligence and other strategic industries opened Wednesday to a cooler reception than its first round, highlighting the effect of recent market volatility on individual investors.
The 600 billion won offering, worth about $443 million, had sold roughly 10 percent of the allocations held by major banks by midmorning. The first offering in May drew far stronger initial demand: bank allocations were taken on the opening day, first-day subscriptions across banks and securities companies reached about 87 percent of the total, and the entire round sold out within five business days.
The Financial Services Commission said subscriptions for the new round will remain open on a first-come, first-served basis through Oct. 15. The two retail offerings are intended to raise a combined 1.2 trillion won. The government will add 240 billion won in subordinated capital, which is designed to absorb losses before money invested by retail participants, creating a total pool of 1.44 trillion won.
The product forms part of the National Growth Fund, an economic initiative launched last year to channel capital toward industries including AI, semiconductors, biotechnology, robotics and rechargeable batteries. Its second offering arrives after a difficult period for the Kosdaq market, a major investment target for the first-round funds.
The Kosdaq index fell from 1,161.13 on May 22, when the initial offering began, to 806.79 on Sept. 14. It closed Wednesday at 855.91, up 0.72 percent on the day but still well below its May level. The first-round funds managed by Mirae Asset, Samsung and KB Asset Management had net asset values of about 1,005 won to 1,006 won as of Tuesday, only slightly above their initial 1,000 won level after previously falling as much as 3.9 percent below it.
Eligibility and allocation changes may also be slowing subscriptions. Investors who joined the first offering cannot participate again. Regulators have reserved 300 billion won, half of the second round, for lower-income investors during the first week, compared with 120 billion won in the first offering. Eligibility for that allocation is limited to people with annual earned income of 50 million won or less, or comprehensive income of 38 million won or less. Any unsold portion will become available to other eligible investors in the second week.
Banks and regulators still expect the offering to sell out, though more slowly than the first round. Financial Services Commission Vice Chairman Kwon Dae-young said the fund could give individuals a chance to share in the growth of strategic industries while providing expansion capital to companies in those sectors.