[THE INVESTOR] The South Korean market for “equity crowdfunding” has been seen gaining momentum recently on growing investor interest amid ultra-low interest rates, industry sources said Nov. 11.

Also referred to as crowd-investing, equity crowdfunding is the online offer of unlisted shares and corporate bonds to a group of investors. In January, South Korea adopted the new model of raising money from the public through the internet and social media.

According to the sources, IBK Investment & Securities recently succeeded in raising 800 million won (US$715,000) to invest in unlisted clothing maker SYJ, marking the first equity crowdfunding case for an apparel company.

The amount exceeded the brokerage‘s initial target of 700 million won as some 100 investors chipped in money. It now brings the number of equity crowdfunding projects that have raised over 700 million won to four.

Since its inception, 65 equity crowdfunding projects have been completed successfully in the country, raising a combined 10.8 billion won.

Market watchers attributed the recent success of equity crowdfunding to a long period of low interest rates, which are promoting investors to search for high-yielding investment vehicles.

“A variety of investment products are drawing attention from the investing public because of prolonged low interest rates,” an industry source said. “Not only individuals but also specialized investors are scrambling to invest in potentially profitably projects.”

South Korea’s interest rates remain at a record-low level amid the sputtering economy. Early this month, the Bank of Korea held the key rate steady at 1.25 percent for August after the central bank made a surprise quarter-percentage rate cut in June, citing the need to help spur growth.


(theinvestor@heraldcorp.com)