KIC to Build Korean-Style Strategic Sovereign Fund Into Ultra-Long-Term 'Patient Capital'

Park Il-young, CEO of Korea Investment Corp.

'Invest in Strategic Industries Without Set Maturities

And Serve as Anchor Capital to Attract Overseas Funds'

Park Il-young, chief executive of Korea Investment Corp., or KIC, has laid out a blueprint for operating a Korean-style strategic sovereign wealth fund. At its core is a plan to build it into ultra-long-term "patient capital" that can stay invested in companies without fixed maturities or liquidation deadlines.

In a keynote speech at a conference hosted by KB Financial Group and the Alternative Investment Management Association at the Fairmont Ambassador Seoul in Yeouido on September 10, Park said the biggest risk for long-term investors is not market volatility but impatience over returns. Pressuring investments to produce quick results inevitably shortens the investment horizon, making it harder to prepare for the future.

The remarks marked the first time KIC has publicly set out the role and investment philosophy it envisions for a Korean-style sovereign wealth fund. In July, the government unveiled a plan for a Korean-style strategic sovereign fund that would use KIC's investment expertise and global network to provide long-term capital to strategic industries including artificial intelligence and semiconductors.

Park described the creation of a strategic account as the biggest shift since KIC was founded. Until now, KIC has operated as a savings-style sovereign fund, investing overseas in foreign-currency assets entrusted from South Korea's foreign-exchange reserves. It now aims to expand that role into a strategic sovereign fund supplying long-term capital to domestic strategic industries. He outlined three functions for the strategic account: long-term equity investment with no preset maturity or liquidation date; anchor investment by KIC to draw in overseas capital; and follow-on investment that supports corporate growth after policy financing has completed its role.

Companies would gain capital free from pressure to return funds, while the country would strengthen the foundations of its technological sovereignty and KIC would secure promising investment opportunities. The plan is for the sovereign fund to fill the gap between policy funding and private capital with long-term investment.

KIC also plans to tap the network it has built in global investment markets. Alongside the globalization of Korean capital, Park proposed what he called the "Koreanization of global capital," signaling KIC's intention to actively attract overseas institutional money. Trust itself is capital, he said, and other capital moves in response to it. KIC, he added, will serve as anchor capital for global money flowing into Korea.

Min Kyung-jin, Hankyung.com reporter min@hankyung.com