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KIC plots $10bn alternatives investment drive

The $57 billion fund’s chief investment officer Lee Dong Ik has vocalized its ambition to triple its allocation of alternative assets including real estate and private equity in the next three years.

Korea Investment Corporation (KIC) is expecting to invest up to $10 billion in alternative assets, including real estate, by 2016, the $57 billion Korean sovereign wealth fund has told Bloomberg.

Chief investment officer Lee Dong Ik said in an interview the fund had plans to up its allocation to alternative assets, also including private equity and hedge funds, up to 20 percent of its total assets from 6.1 percent at the end of 2012.

He said the fund was going to commit between $5 billion and $10 billion to alternative asset investments during the next three years.

He highlighted how alternative assets had a “different risk-return” and liquidity profile when compared to traditional equities and bonds.

Unlike the larger National Pension Service of Korea, KIC has been slow in putting capital to work in real estate. However, last year, it communicated an appetite to invest in the asset class via third-party funds – a departure from many Korean investors, NPS included, which have invested significant equity directly.

According to PERE’s Research and Analytics division, KIC has as of March invested $850 million in real estate since its founding in 2005, accounting for approximately 1.5 percent of its total assets. 

In 2010, it picked alternatives asset manager Partners Group to help it make private real estate investments. The year before, it picked the Swiss firm to make private equity secondaries investments.

The Seoul-headquartered fund is mandated to manage some of Korea’s exchange reserves entrusted by the government and the Bank of Korea.