IGIS, KKR to found JV for real estate investment in Korea

US private equity investment giant KKR & Co. and IGIS Asset Management Co., the largest real estate fund manager in South Korea, will set up a joint venture in Seoul during the second half of this year. The new entity will be the first JV between a Korean real estate firm and an overseas investment manager.

IGIS will spin off its Value-add Investment Part to establish the real estate investment JV, according to investment banking sources on April 28. Each KKR and IGIS will hold a 50% stake in the JV, and the other details haven’t been confirmed, an IGIS official told The Korea Economic Daily.

IGIS’ Value-add Investment Part is focusing on creating values of domestic properties through redevelopment. The investment part's portfolio includes City Plaza and O2 Tower in Seoul’s Yeouido Business District and Namsan Square on Mt. Namsan near Seoul Station.

KKR and IGIS have jointly acquired some landmark properties in Korea. In February 2020, the New York-based investment firm led a consortium with IGIS and SK D&D Co., Korean conglomerate SK Group's real estate development unit, and acquired Namsan Square from the National Pension Service (NPS) of Korea for around 500 billion won ($393.8 million).     

In October 2018, KKR, IGIS and NPS jointly purchased the former Renaissance Hotel site in Gangnam, which was under construction at the time, for around 2.1 trillion won from Korean engineering firm Daor E&C Co. The property has been redeveloped as Josun Palace, which Shinsegae Group’s hotel unit Josun Hotels & Resorts opened in May 2021. The hotel has been branded under The Luxury Collection, Marriott International’s high-end hotel brand.   

KKR is understood to accelerate its real estate investment in Korea and other Asian countries. In January 2021, it held the final close of KKR Asia Real Estate Partners, a US$1.7 billion fund focused on opportunistic real estate investments in the Asia Pacific. The fund includes $295 million from KKR's balance sheet and employees, the US private equity firm said.

IGIS is also strengthening its local real estate portfolio with flagship landmarks in Seoul. A consortium of IGIS and Shinsegae Group is competing with the other final bidder Mirae Asset Management Co. to buy the International Finance Center in Seoul (IFC Seoul) from Brookfield Asset Management Inc. The deal is estimated at over 4 trillion won, which will be the largest real estate transaction in Korea this year.

In addition, IGIS signed the final contract last December to purchase Millennium Hilton Seoul for 1.1 trillion won from Singapore-listed City Developments Limited (CDL). The real estate firm raised capital of 1.4 trillion won by issuing bonds in February for the acquisition and redevelopment of the hotel on Mt. Namsan.

Write to Si-Eun Park at seeker@hankyung.com
Jihyun Kim edited this article.