State-owned Korea Investment Corporation (KIC), which manages assets worth $25 billion, has signed separate memorandums of understanding with Queensland government-owned QIC, an institutional investment manager, and Malaysian sovereign wealth fund Khazanah Nasional, to expand cooperation and jointly pursue investment opportunities.
This follows news last week that the South Korean government is injecting $3 billion into KIC of which the KIC will invest $1 billion in alternatives. The Korean sovereign fund is currently considering investments in LBO, mezzanine, distressed, growth capital, venture capital and real estate funds, it said in its 2008 annual report.
KIC will pool expertise and resources with the Malaysian and Australian firms and will explore opportunities for business collaboration, it said in a statement. Tan Sri Dato' Azman Hj Mokhtar, Khazanah's managing director, said in a statement: “[We] hope that this tie-up will encourage cooperation and strengthen the business relationship between Khazanah and KIC for our mutual interest, that will be targeted to pave the way for two-way investments flow between the two entities.”
The agreement is also expected to encourage cross-border investments and partnerships among private companies in the two countries, he said.
Since the financial crisis last year, the role of local funds as capital providers in the international financial markets has become more important, Chin Young-wook, president and chief executive officer of KIC, said in a statement.
Earlier this month, Korea Development Bank and Korea Trade Promotion Agency signed an agreement with Invest AD (then known as Abu Dhabi Investment Company) to increase the flow of investment between South Korea and the Middle East and North Africa. That agreement encompasses private equity, infrastructure and cross-border mergers and acquisitions.
In May, Kohlberg Kravis Roberts formed an investment agreement with Korea Development bank to help advance the local private equity market, according to Cho Hyun-ik, an executive director at the state-owned Korean bank.
Khazanah is the investment holding arm of the Malaysian government, holding and managing the commercial assets of the government and making strategic investments. The fund has stakes in more than 50 companies valued in excess of $23 billion.
QIC, previously known as Queensland Investment Corporation, manages assets of A$65 billion ($52 billion; €37 billion). It began operations in 1989 and now has more than 80 institutional clients. The firm invests in hedge funds, fixed interest, public equities, real estate, infrastructure and private equity.