Ship investment fund booms in Korea

A mutual fund system for investing in shipping vessels was introduced last month for the first time in Korea. This fund will attract investments from individuals, secure lease vessels to shipping companies, and pay profits to investors in accordance with the Ship Investment Company Act.

The first Ship Investment Company (SIC) approved by the Ministry of Maritime Affairs and Fisheries, the Korea Marine Fund (KOMARF) obtained its business license on 2 February and it will open the fund to the stock market in mid March. In the KOMARF deal, the Export-Import Bank of Korea and the Industrial Bank of Korea will invest 70% in the purchase of a 300,000 DWT VLCC being built at Daewoo at a cost of $69 million, while Hyundai Merchant Marine, which will be operating the vessel, will invest 10%.

The second SIC, Korea Ship Fund (KSF), is capitalized at 7 billion won, with K-one shipping, Woori Bank, Sinokor Merchant Marine Co and a number of private individuals as stockholders. KSF plans to provide vessel construction funds at low costs to shipping companies by effectively using money from the Export-Import Bank of Korea and other banks, and general investment funds.