Rising Interest in the National Growth Fund Scale-Up Three-Way Race... Who Will Prevail?

Stick Investment, Affirma Capital, and J&PE Face Off
Two Shortlisted Candidates to Be Announced End of June; Final Selection in July
Established Leaders vs. Emerging Powerhouses, Domestic vs. Foreign Players

Yonhap News Agency

Competition is intensifying in the Scale-Up League, part of the second round of the National Growth Fund’s investment selection process. Stick Investment, Affirma Capital, and J&Private Equity (J&PE) are each leveraging their unique strengths, creating a three-way race that is drawing keen attention from the industry.

According to the investment banking (IB) industry on June 22, Korea Development Bank, which is overseeing the Scale-Up League for the National Growth Fund, is expected to announce a shortlist of two candidates for the league around June 29. Due diligence will be conducted immediately after, followed by a qualitative evaluation presentation, and the final selection of the fund manager is scheduled for mid-July. This is a fast-paced process, with the final decision set to be made about a month after proposals were accepted on June 10.

The target fund size is 500 billion won. Unlike other leagues, however, there is no upper limit (hard cap) on the fund’s size. Since funds managed by the first round of National Growth Fund GPs already attracted investments that surpassed their targets, there are expectations that demand to invest in the Scale-Up League—which has no hard cap—will be significant.

Currently, three general partners (GPs) are competing: Stick Investment, Affirma Capital, and J&PE. In terms of scale, Stick Investment and Affirma Capital stand out. Stick Investment is recognized as a first-generation, large-scale domestic private equity fund (PEF) manager. Affirma Capital, which was spun off from Standard Chartered Bank’s private equity division, is also considered a major player, having managed multi-trillion-won funds overseas. J&PE, while a relatively new fund manager, is rapidly growing and has established itself as an emerging powerhouse.

Looking solely at scale, Stick Investment and Affirma Capital might seem to have the advantage. However, industry forecasts suggest that fund size will not be a decisive factor in this selection process. In traditional alternative investment mandates, the ability to form a fund was usually a key metric. For the National Growth Fund, however, ample investment demand is already in place, making this less of a differentiator. Instead, it is anticipated that the track record and returns in advanced industries—such as artificial intelligence (AI), semiconductors, biotech, secondary batteries, and next-generation mobility—will be the deciding factors, rather than quantitative indicators like the size of the fund manager.

As long-established large firms, both Stick Investment and Affirma Capital have a substantial history of investing in advanced industries. Stick Investment has consistently invested in high-tech sectors, including Jaewon Industry (secondary batteries and semiconductor materials), Chaevi (electric vehicles), and H2 (next-generation energy). Affirma Capital has also expanded investments in advanced materials by acquiring SK Nexilis’s FCCL (Flexible Copper Clad Laminate) business unit, Toray Advanced Materials’ FCCL business unit, and Gwangjin Chemical (semiconductor waste chemical recycling). J&PE has steadily invested in advanced industry areas such as TKG Huchems (high-performance advanced materials), Jaeyoung Solutec (ultra-compact optical solutions), and APS (display and semiconductor equipment).

This competitive bidding process is not only a contest between established and emerging players but is also seen as a showdown between foreign and domestic entities. Affirma Capital is a foreign fund manager with roots in Standard Chartered Bank, while Stick Investment and J&PE are purely domestic fund managers. However, there is some debate regarding Stick Investment’s “nationality” after its recent acquisition by U.S.-based Miri Capital. An IB industry official commented, “As soon as a manager is selected, capital will pour in, so the outcome is likely to be determined by qualitative factors rather than quantitative ones such as fund size. Since these investments are closely tied to the development of national industries, the industry is watching this contest with great interest.”

This content was produced with the assistance of AI translation services.