KIC to form alternatives joint fund with Korea’s NongHyup

Korea Investment Corporation (KIC) is preparing to launch a joint fund with NongHyup, or the National Agricultural Cooperative Federation, to invest in overseas alternative assets as the cooperative is seeking to bolster deal sourcing capability for higher yields, their senior officials said on July 1.

They will target mainly private equity deals for an undisclosed sum.

“We are working on setting up a joint venture with KIC to run an overseas alternative investment fund,” NongHyup chief investment officer Hak-joo Park said in a seminar to mark the 15^th anniversary of the sovereign wealth fund.

Park stressed the importance of deal sourcing, saying that investment targets are limited despite an increase in capital. NongHyup manages 305 trillion won ($254 billion) in assets.

“Local institutions have no chance to participate in lucrative investment deals in other countries from the beginning. We want to share global networks with KIC,” he added.

They expect to make an official announcement on the joint venture after mid-July.

KIC will control 75% of the venture, while NongHyup holds the remaining 25%, KIC chief executive Heenam Choi told the seminar.

Once the venture is established, NongHyup will become the first Korean institutional investor other than the four designated institutions to co-invest with KIC.

Under the law, KIC is allowed to manage assets entrusted only by the finance ministry and the Bank of Korea, as well as the National Pension Service (NPS) and the Government Employees Pension Service (GEPS).

“Because of the law, we cannot help but decide to form a joint venture,” Choi said.

In other countries, however, sovereign wealth funds, including Australia’s Queensland Investment Corporation, manage assets for institutional investors.

The finance ministry and the Bank of Korea have entrusted a combined $100 billion to KIC, which have grown to $157.3 billion as of the end of last year. Alternatives account for 15.6%, or $25 billion.

KIC aims to more than double its assets under management to $400 billion by 2035.

Meanwhile, James Kim was installed as KIC’s deputy CIO and head of alternative investment on July 1.

Write to Sang-eun Lucia Lee and Seonpyo Hong at selee@hankyung.com


(Amended on July 3 to correct the third paragraph from the bottom. It was only the finance ministry and the Bank of Korea that have entrusted capital to KIC since its inception in 2005.)