KIC, cooperative federations to coinvest $300m with foreign hedge funds

South Korea’s sole sovereign wealth fund Korea Investment Corp. said Thursday that it has teamed up with two Korean institutional investors to deploy a combined $300 million for co-investment with non-Korean hedge funds in a bid to increase foreign alternatives exposure.

Under the plan, the three entities -- KIC, National Agricultural Cooperative Federation and National Federation of Fisheries Cooperatives -- will create a joint venture before the end of 2021 and start their first co-investment with a foreign hedge fund in January 2022.

KIC, NACF and NFFC are to deploy $150 million, $100 million and $50 million, respectively.

The joint venture announcement is the latest development since the three institutions signed a memorandum of understanding for foreign investment.

KIC said the new joint venture will lay the groundwork for the sovereign wealth fund’s further co-investment in overseas alternative assets with domestic institutional investors. It added that details about the co-investment procedure, portfolio and mechanism are under review among the participating institutions.

“The collaboration will allow us to share co-investment opportunities and reduce commission fees,” KIC Chief Executive Officer Jin Seung-ho said in a statement.

“We chose to lay out an investment structure to co-invest with hedge funds on account of its scalability, under which domestic institutional investors are able to jump in.”

The KIC was managing $183.1 billion in dollar-denominated assets entrusted by the Bank of Korea and the Ministry of Economy and Finance as of 2020. Its alternative exposure stood at 16.1 percent as of May.

By Son Ji-hyoung (consnow@heraldcorp.com)