KIC to increase exposure to private equity

The Korea Investment Corporation, the sovereign wealth fund of South Korea, wants to increase its exposure to private equity over the next few years, according to an article in the Financial Times.

KIC's chief executive, Chin Young-wook, told the FT in a recent interview the fund, with about $30 billion in assets, was looking to invest up to 20 percent of its assets in private equity and hedge funds.

In June 2009, the Korean government agreed to inject $3 billion into KIC, of which $1 billion was to be invested in alternatives. KIC targets investments in buyouts, mezzanine, distressed, growth capital, venture capital and real estate.

“The global economy has just started to recover and there are many distressed companies around the world,” Chin told the FT. “This means great investment opportunities for private equity funds, which can buy such businesses and turn them around.”

Last month, KIC decided to invest $100 million in a private equity fund managed by the International Finance Corporation, the private investment arm of the World Bank. The IFC Africa, Latin America and Caribbean Fund is targeting commitments of $1 billion to invest in small- to mid-sized companies in the three regions.

South Korea has become more private equity friendly over the past year. The country's National Pension Service, the world's fifth largest pension fund, bought a 12 percent stake in London's Gatwick Airport earlier this year. That pension is increasing its exposure to infrastructure, private equity and real estate funds to 6.4 percent this year from 4.5 percent last year.

South Korea's financial regulator the Financial Services Commission (FSC) is trying to relax rules related to establishing and operating private equity funds to attract more local and overseas investors to the asset class.