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KIC to lower barriers for smaller local funds

Korea’s sovereign wealth fund Korea Investment Corp. will lower barriers for smaller local funds to be eligible for entrustment to seek economies of scale in its overseas investments, the government said Tuesday.

The Ministry of Strategy and Finance said the government agreed at a Cabinet meeting on the revision of the KIC-related act to induce more entrustment of the local institutions into the KIC and expand the scope of KIC’s investment targets.



According to the government’s plan, the KIC will lower the threshold of local investment firms’ eligible entrustment to 100 billion won ($855 million) from the current 1 trillion won.

“The restriction was excessive, which limited small and medium-sized funds’ entrustment in KIC,” the ministry said in a statement.

With the change, local investment firms will be able to make use of KIC’s specialty in overseas investment, while KIC will be able to benefit from economies of scale in operating its fund.

The government also enlarged the KIC’s investment portfolio to include “special assets” such as social overhead capital.

As of the end of October, KIC’s assets stood at $108 billion, the largest after the National Pension Service’s $110 billion investment overseas.

By law, the KIC is obliged to invest in foreign assets only. Its investment portfolio is mostly comprised of equities and fixed income, while alternative investments in hedge funds, private equity and real estate accounts for about 13.4 percent.

By Kim Yoon-mi (yoonmi@heraldcorp.com)
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