DSC Investment (Photo captured from DSC’s website)
South Korean asset manager DSC Investment has formed the country’s largest-ever fund for venture capital secondaries to explore opportunities for undervalued startup stocks.
The leading VC firm, which has invested in game publisher Kakao Games Corp., grocery shopping app operator Kurly Inc. and fashion platform Musinsa Co., said on Wednesday it has created a 300 billion won ($218.9 million) secondary fund with a six-year maturity and target return of 8%.
Secondary funds buy existing assets from primary private equity markets. Through transactions of mature assets, the funds could provide asset sellers with return of capital and offer buyers a discount on the purchase price.
The secondary fund of DSC will use a package deal strategy as a key transaction method, which trades multiple assets together at the same time, said the VC firm’s Director Lee Sung-Hoon. DSC looks to garner attention from many investors looking for selling opportunities, Lee added.
LIQUIDITY IN FROZEN VC MARKET
DSC Investment Director Lee Sung-Hoon (Courtesy of DSC)
Founded in 2012, the Seoul-based asset manager has been focusing on fast-growing domestic tech startups. The VC firm has expanded investments in secondaries since 2021, targeting undervalued companies with robust earnings.
DSC sees rising demand for domestic VC secondary funds amid the slowdown in the initial public offering market and tougher investment environment with elevated interest rates.
Local startups, particularly those that have completed Series B funding rounds, are significantly undervalued today and increase the need for VC secondaries, a DSC official said.
As more local startups accept devaluation, or cutting their enterprise value from a previous one, to attract investments today, DSC’s secondary funds will provide liquidity to the venture capital ecosystem and accelerate capital returns, the official added.
By Joo-Wan Kim
kjwan@hankyung.com
Jihyun Kim edited this article.
