KIC bets on AI-driven value creation: CEO

Sovereign wealth fund Korea Investment Corporation (KIC) will aggressively explore early investment opportunities in sectors undergoing AI-driven innovation, which would beef up their valuations, said its new chief executive on Wednesday.

"AI Technology will rapidly innovate and increase valuations for not only the science and medical industries but also almost all industries, which have big implications for alternative investments," said Park Il Young in a keynote speech at global investment conference ASK 2024.

"We will look for [investment] opportunities created by technology innovation," added the former World Bank Group executive director, who took over as KIC's chief executive late last month.

He cited data storage and management, cyber security and education, and healthcare as beneficiaries of the AI boom.

For its startup portfolio, Yoon H. Huh, KIC's private equity head, picked fintech, space tech and cyber security for its AI-themed investing during a panel discussion of limited partners at the ASK 2024.

In the infrastructure sector, it will boost exposure to North America and emerging markets in pursuit of stable cash flows, while seeking to limit their downside risk.

Overall, the sovereign wealth fund will take a more selective approach to alternative assets and reinforce risk management as escalating tensions in the Middle East, the prolonged Ukraine-Russia war and political uncertainties pose risks to consumer prices and global supply chains.

Park pointed out the surge in VIX, a volatility index, in August, underscored investors'  market risk jitters, despite the US stock market's bull run amid moderating inflation and growing hopes for economic recovery.

"We will take a more selective approach to alternative investments, which require risk management and sharp insight more than before," he said

It was Park's first public speech as KIC chief at an international investment conference since appointed to the post late last month.

For the real estate portfolio, the KIC will target data and logistics centers, as well as residential buildings, for private debt as the sectors still find it difficult to borrow money, despite falling interest rates. 

As of the end of 2023, some 22% of its $189.4 billion in assets under management is allocated to alternative investments.

(Updated with comments from KIC's private equity head)

Write to Yeonhee Kim at yhkim@hankyung.com
 


Jennifer Nicholson-Breen edited this article.