Korea Investment Corporation will open a San Francisco office within the year to improve its deal sourcing capability for technology startups and other alternative assets, while beginning to entrust domestic asset managers with part of overseas stocks and fixed income investment.
“KIC’s global operations had been limited to financial hubs such as New York, London and Singapore. We will move into the outposts specializing in alternative investments going forward,” Heenam Choi said in a news conference on Feb. 6.
The sovereign wealth fund is aiming to enter the “inner circle” in Silicon Valley to explore investment opportunities, he told reporters.
In 2019, KIC posted a 15.39% return on investment which translated into $20.2 billion in proceeds. The result compared with a negative return of 3.66%, or loss of $5.1 billion, a year earlier.
Traditional assets such as stocks and fixed income, which accounted for 76.3%, produced a return of 16.62% last year, with alternatives returning 9.02%.
It plans to award up to $400 million mandates to domestic investment houses for traditional asset management, in its first allocation to domestic companies to manage overseas portfolios.
For alternative investment with a share of 15.6%, KIC will encourage more Korean companies to participate in deal financing and to provide legal, accounting, consulting and tax services.
The move comes after lawmakers criticized state-run financial institutions to pay relatively high fees to foreign companies and to make little contribution to supporting domestic firms’ global expansion.
Meanwhile, KIC decided in December 2019 to give more consideration to the environment, society and governance factors in selecting alternative asset managers.
KIC manages $157.3 billion as of the end of 2019.
By Hyun-il Lee
<Edited by Yeonhee Kim>