KIC buys stake in US credit asset manager Golub Capital

Korea Investment Corporation (KIC) has made its first direct investment in an asset management firm, the South Korean sovereign wealth fund said on Dec. 9. The fund has acquired a passive, non-voting minority stake of less than 5% in US direct lending and credit asset manager Golub Capital LLC and its affiliates.

Golub Capital said it plans to use the proceeds from KIC’s investment to further enhance its ability to deliver distinctive, compelling and reliable financing solutions to private equity sponsors. The deal value was not disclosed.

Investment banking advisory firm Evercore Inc. and law firm Kirkland & Ellis LLP respectively served as financial advisor and legal counsel on the transaction. Audit firm KPMG International Ltd. and law firm Greenberg Traurig LLP respectively acted as financial advisor and legal advisor to KIC.

KIC aims to increase its return on direct lending and credit as well as other alternative assets through the expansion of the partnership with Golub Capital.

The world’s 14th-largest sovereign wealth fund allocates $37.6 billion, or 21.3% of its total assets under management, to alternative investment as of end-August. The proportion rose 380 basis points from the end of the last year. Direct lending makes up 32% of the alternative investment as of end-2021.

The alternative assets provided KIC with diversification amid market volatility this year. Although the state-run fund had a 16.9% loss from traditional assets from January to end-August, the entire investment portfolio had a 13.9% loss thanks to some positive returns on alternative assets.

Founded in 1994, Golub Capital manages $55 billion in assets and has over 725 employees around the world as of Oct. As a leading private debt investor, the firm invests in direct lending, mezzanine debts, credit and others.

Golub Capital has expanded its presence in Korea via partnerships with the country’s major institutional investors. In July, Government Employees Pension Service (GEPS) selected the investment firm, Barings and Goldman Sachs to manage each 50 billion won ($38.4 million) in private debt investments.

Korea Scientists and Engineers Mutual-Aid Association (SEMA) tapped Golub Capital and Ares Management to invest a combined $60 million in mid-cap private debt in 2017. SEMA committed additional $70 million to Golub Capital this year.

Public Officials Benefit Association (POBA) also hired the US direct lending manager alongside Ares Management and Antares Capital for North America-focused private debt investment in 2018.

Korean institutional investors are expected to increase their direct investment in asset managers. In early 2021, National Pension Service (NPS), the world’s third-largest pension fund, acquired around a 20% stake in UK private equity firm BC Partners through a Blackstone fund.   

Write to Jun-Ho Cha at chacha@hankyung.com
Jihyun Kim edited this article.