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Sovereign wealth funds

KIC, NongHyup, Suhyup to co-invest $300 mn in overseas hedge funds

The three LPs plan to begin investment from January 2022 and may bring more Korean LPs into the fund

Nov 11, 2021 (Gmt+09:00)

KIC, NongHyup and Suhyup agree to jointly invest 0 mn in overseas hedge funds
KIC, NongHyup and Suhyup agree to jointly invest $300 mn in overseas hedge funds

Korea Investment Corporation (KIC) is slated to jointly invest a combined $300 million in overseas hedge funds with Korea’s National Agricultural Cooperative Federation (NongHyup) and National Federation of Fisheries Cooperatives (Suhyup). On November 11, the South Korean sovereign wealth fund signed an agreement with the two other institutional investors to establish a joint venture for the co-investment management. KIC, NongHyup and Suhyup will invest $150 million, $100 million and $50 million in the new JV, respectively. 

Following agreements on the details of the investment procedures and composition of the portfolio, the three LPs plan to complete the JV establishment within this year and begin co-investment as early as January 2022.

“Through the agreement, we expect to reduce asset management fees and raise portfolio management efficiency, as well as to increase hedge fund investment opportunities. The JV is considering involving more LPs in the investment, and we’ll do our best to transfer overseas investment networks and know-how to the Korean LPs,” said KIC Chief Executive Jin Seoungho.

For years, KIC has partnered with many Korean LPs to boost overseas alternative investments. In Feburary of this year, KIC and Korea's major bank Woori Bank signed a memorandum of understanding to cooperate with investment in overseas real estate and infrastructure. At the time, KIC said it had led Korean banks' investments in syndicated loans to fund overseas alternative investments, with a combined worth of $540 million as of end-2020.

In July 2020, the sovereign wealth fund announced a $400 million JV with the cooperative to invest in overseas private equity deals. KIC and NongHyup invested $300 million and $100 million, respectively. Before that, NongHyup in May 2019 signed an MOU to entrust KIC with part of its overseas alternative asset management. Analysts see these partnerships as the basis to attract more Korean LPs' investment in foreign alternative assets and thus bolster deal sourcing capability for higher yields.

The sovereign wealth fund will increase alternative investment to 25% of its portfolio by 2027 from the current 16% and considers technology, healthcare, digital infrastructure, renewable energy and logistics as promising sectors, CEO Jin said during alternative investment forum ASK 2021 held in October

By Jihyun Kim

snowy@hankyung.com

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