Korea Investment Corporation (KIC) has changed the roles and authority of high-level employees as it strives to seize more investment opportunities in alternative assets.
The main change is in the decision-making process for the South Korean sovereign wealth fund’s alternative investments, with executives and senior managers given the authority to approve investments in the asset class based on deal size.
Effective from the end of 2019, a chief investment officer is permitted to approve a co-investment with a value of less than $100 million, and a division head of alternative investment can approve a co-investment worth $30 million or less. Any alternative investment with a value of $100 million or more should be approved by the fund’s chief executive officer.
KIC previously allowed only its chief executive officer to approve alternative investments, regardless of the size. The fund also announced major structural changes six months ago that elevated the investment strategy, alternative investment and investment operation groups to division level, giving each greater autonomy.
A division head can now approve a consulting fee of $20,000 or less, which is paid to an advisory firm prior to a decision on the investment, and can make decisions on governance affairs of special purpose vehicles related to the alternative assets.
The changes are intended to make decision-making more efficient as the fund seeks to expand its investment abroad in partnership with global institutional investors, industry watchers said. KIC plans to increase its allocation to alternative assets from 15.6% at the end of 2019 to 20% in the mid to long term, diversifying away from traditional assets such as stocks and bonds.
The fund, which managed $157.3 billion at the end of 2019, is the 15th largest sovereign wealth fund globally, according to the Sovereign Wealth Fund Institute. It recorded an investment return of 15.39% in 2019, with an annualized investment return of 5.55% over the five years through 2019. (Reporting by Ar-rum Rho)