South Korea’s sovereign wealth fund, the Korea Investment Corporation (KIC), will invest $100 million in a private equity fund managed by International Finance Corporation (IFC), 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, a KIC official told PEI Asia.
The fund is managed by IFC Asset Management Company, a wholly-owned subsidiary of IFC that invests third party capital. The fund is seeking commitments from national pension funds, sovereign funds and other sovereign investors from IFC’s shareholder countries to co-invest in IFC transactions, according to the IFC’s website.
IFC Asset Management Company also manages the $3 billion IFC Capitalisation Fund, which aims to protect important emerging markets banks from the effects of the global financial crisis.
KIC has only recently started its private equity programme. In June 2009, the Korean government agreed to inject $3 billion into the sovereign wealth fund, of which $1 billion is to be invested in alternatives. KIC plans to invest in LBO, mezzanine, distressed, growth capital, venture capital and real estate funds, according to its 2008 annual report.
A month later, the sovereign wealth fund awarded a private equity secondaries mandate to Switzerland-based Partners Group.
KIC was formed in 2005 to manage a portion of the country’s foreign reserves. It began operations with a sum of $20 billion, of which the Bank of Korea contributed $17 billion and the Ministry of Finance and Economy, $3 billion. It currently manages assets of $25 billion.