[ASK 2019 SUMMIT] KIC to boost alternatives with co-ops' assets

Korea Investment Corporation (KIC) will raise the proportion of alternative investments with further diversified portfolios, while seeking to manage part of two major national cooperatives’ investment assets in addition to Korea Post’s.

“KIC will increase the proportion of alternative assets to 20% within the next two to three years,” KIC’s Chief Executive Officer Heenam Choi said in a keynote speech for the ASK 2019 Private Debt & Private Equity Summit hosted by the Korea Economic Daily in Seoul on May 15.

Currently, alternative assets make up 16% of KIC’s assets of over $100 billion.

 

The sovereign wealth funds have signed memoranda of understanding with the National Agricultural Cooperative Federation (Nonghyup) and the National Federation of Fisheries Cooperatives (Suhyup) this week to cooperate in co-investment and to manage part of their assets.

“According to the MOU, we will discuss various measures to cooperate in global investment including entrusting part of Nonghyup’s global alternative investment assets to KIC, co-investment, manpower exchange and research,” KIC said in a statement released on May 13.

Nonghyup is short for the National Agricultural Cooperative Federation and the parent company of NH Investment & Securities Co. Ltd., NH Bank and NongHyup Life Insurance Co. Ltd.

KIC signed a similar MOU with Suhyup which has assets of over $8 billion on May 16.

In February, it signed an MOU with Korea Post to cooperate in global investment.

KIC has been trying to expand its client base made up of only the public sector since the beginning of this year.

For the cooperatives, they may make direct investments in alternative assets sourced by KIC, instead of going through domestic vehicles run by local asset managers to save fees and bolster returns.

With high valuations and geopolitical uncertainties such as the US-China trade tensions weighing on equities markets, Choi said that KIC will explore new opportunistic investments including sector-focused funds and capital commitment to venture capital funds, while making steady investment in core strategies such as buyout deals.

Further, it is interested in investing in small to mid-cap companies which have plenty of value creation opportunities given low purchase prices and will boost co-investment with general partners to save fees, Choi added.

Meanwhile, KIC plans to increase allocation to hedge funds gradually after a three-year lull in its hedge fund investment, CIO Shinwoo Kang said in a keynote speech for the ASK 2019 Hedge Fund & Multi Asset Summit on May 16.

By Donghun Lee

leedh@hankyung.com