[E-Daily Marketin Reporter LEE GEON-EOM ] It has been confirmed that LG Uplus(032640)is raising a follow-on fund worth approximately 66 billion won through LG Technology Ventures, the group’s corporate venture capital (CVC) arm. With the investment execution for its second fund—established in 2023—now complete, the company has launched a new fund of the same size. This move is seen as a demonstration of its commitment to maintaining a seamless channel for securing global technology as it shifts its business structure from a telecommunications-centric model to one centered on artificial intelligence (AI).

According to a comprehensive report by E-Daily on the 13th, LG Uplus is reported to have recently completed the relevant procedures for establishing a dedicated follow-on fund managed by LG Technology Ventures. Previously, LG Uplus passed a resolution at its board meeting last July regarding the “establishment of overseas subsidiaries and approval of investments.”

Since the fund is raised in foreign currency, the won-denominated amount may vary slightly depending on exchange rates, but it will be established at the same scale as the previous fund. LG Uplus’s investment in Fund No. 2 stands at 66 billion won on a book value basis. Starting with 26.1 billion won at inception, the fund’s size was expanded through capital calls—where funds are contributed in installments as investments are made—and an additional 14.8 billion won was contributed during the most recent fiscal period.

This is the largest investment among the Fund No. 2 funds in which affiliates have invested in LG Technology Ventures. Compared to figures disclosed by each company—such as LG Energy Solution (52.7 billion won), LGELECTRONICS (30.8 billion won), LG CNS (21.0 billion won), and LG Innotek (13.8 billion won)—LG Uplus’s investment is nearly five times larger, leading to the assessment that it is the most active among affiliates in utilizing the group’s CVC.

LG Uplus has invested through a dedicated fund structure in which it contributes capital to a U.S. limited liability company (LLC) wholly owned by affiliates, with LG Technology Ventures responsible for management. Starting with the first fund, “LG Uplus Fund I,” in 2018, the company established “LG UPLUS FUND II LLC” in July 2023. Since CVCs prioritize securing technologies that can create synergies with the parent company’s core business over financial returns, LG Uplus has also utilized these funds as a channel for identifying global startups that can be integrated with its own operations.

The market views this follow-on fund as a boost to LG Uplus’s expansion of its AI business. LG Uplus has been integrating technologies from LG Technology Ventures’ portfolio into its own services, and the company believes that the role of this channel for acquiring external technology will become even more significant amid the ongoing AI transformation. In fact, LG Uplus launched the global version of its children’s metaverse service, “Kids Topia,” in 2023 using technology from InWorld AI, a U.S.-based AI company that creates virtual characters.

This move aligns with the company’s recent investments in the second phase of the Paju AI Data Center (AIDC) and its cloud migration efforts. Analysts view this as a strategy to accelerate the pace of its AI transformation by simultaneously investing in both internal infrastructure and external technology.

CVC investments at the group level are also gaining momentum. LG Corp.’s Technology Ventures, which began in 2018 with $430 million (approximately 647.5 billion won) contributed by five affiliates, has now grown its assets under management to $890 million (approximately 1.34 trillion won).

Having participated in about 10 investment rounds last year, LG Technology Ventures has already made six investments in the first quarter of this year alone, realigning its portfolio with a focus on physical AI. Analysts note that the fact LG Uplus’s second fund was fully deployed just three years after its establishment is also in line with this trend of expanded investment.

Returns on investment are also becoming visible. LG Technology Ventures recovered $110 million this year by selling its stake in the biotech company Aselex and is planning to recoup investments in AI companies such as Anthropic, Moloco, and MakinaRocks Co., Ltd. As a virtuous cycle of investment and returns takes shape, the incentive for affiliates to contribute capital is growing, according to assessments.

Meanwhile, there is speculation that other affiliates that have fully committed their funds to Fund No. 2 will soon make follow-on investments. In 2023, four affiliates—LG Energy Solution, LGCHEM, LG Uplus, and LG CNS—decided to contribute to follow-on funds in the same year, and LG Technology Ventures is also reported to have been considering the formation of an additional fund since early this year.