KIC eyes private debt, infrastructure in era of high interest rates

Sovereign wealth fund Korea Investment Corp. (KIC) is eyeing infrastructure and private debt in the era of higher-for-longer interest rates, while maintaining a mid-to-long term plan to expand its proportion of alternative assets, said CEO Jin Seoungho at the keynote speech of ASK 2023 on Wednesday.

“As higher interest rates stay longer than expected, some asset values that soared after the pandemic breakout have declined today. The values of alternative assets, particularly commercial real estate, are no exception,” said Jin at the biannual forum on global alternative investments.

“Although liquidity tightening could hurt alternative assets in the short term, it also could create great opportunities to invest in high-quality assets with attractive valuation,” he added.  

The state-run fund aims to increase its proportion of alternative assets from 22.8% as of end-2022 to 25% by 2025, as well as step up its direct investments and co-investments, the CEO said.

The sovereign wealth fund sees greater opportunities in infrastructure and private debt than in other asset classes.

The three “D”s — decarbonization, digitalization, and demographics — are the key themes driving structural changes today and generating attractive opportunities, the CEO noted.

KIC also forecasts growing demand for private lending as traditional banks’ regulations for loans tighten, he said.

In addition, the sovereign wealth fund is taking a selective approach to private equity in artificial intelligence, healthcare and other sectors with long-term growth. It is also looking for opportunities in single-family homes, student housing and data centers with strong fundamentals, the CEO noted.

Write to Jihyun Kim at snowy@hankyung.com
Jennifer Nicholson-Breen edited this article.