The Korea Investment Corporation (KIC) plans to concentrate on alternative investments and overseas investments this year to become a sovereign wealth fund with global management capabilities, the Financial Times reported on June 15.
According to the industry sources on June 14, the KIC, led by Chief Executive Officer (CEO) Heenam Choi, planned to increase alternative investments this year to improve profitability.
The KIC plans to deepen its participation in loan syndication to expand alternative investments this year and raise funds through overseas branches of domestic banks.
Loan syndication refers to a process involving two or more financial institutions to provide large-scale loans to foreign companies. The KIC participated in five loan syndication projects worth about $430 million last year.
The KIC will also continue to increase its domestic financial services, including law, tax, accounting and consulting. As of the end of last year, the KIC signed 22 contracts for domestic legal advice and 15 contracts for tax and other advice.
The sovereign wealth fund will also push for joint investments with domestic institutions by taking advantage of its rich experience in overseas investments and access to valuable information.
Choi said at a press conference in February that he will increase the portion of alternatives this year and boost the involvement of local financial institutions and advisers.
At the end of last year, alternative assets accounted for 15.6% of KIC assets. The remaining 84.4% were stocks and bonds.
The relative proportion of alternative assets decreased from the end of the previous year due to the high return (16.6%) of traditional assets, including stocks. The size of alternative assets increased 14% ($3 billion) from the year before to $24.5 billion.
“We are gradually increasing alternative investments to distribute risk and generate long-term profits,” said Choi.
The KIC has established a system of mutual cooperation among its members by holding more than four consultative meetings a year. The members share financial market information and decide on joint investments through meetings. It is also operating an international financial consultative body for domestic financial institutions in other countries.
“It is important to [focus on] promising alternative investment opportunities using global networks,” Choi said on April 27. “The KIC will use its capabilities on building a balanced portfolio considering both opportunities and risks.” (Reporting by Hyewon Chang)