Exclusive: KIC seeks manager for $2bn infra fund

Korea’s $90bn sovereign wealth fund has consulted with local firms but says foreign GPs also have a chance.

Korea Investment Corporation has kick-started its search for a general partner to manage the $2 billion Korea Overseas Infrastructure Fund by meeting with heads of local firms last week. 

“GPs will be selected to co-invest and manage the infrastructure fund where KIC plans to commit up to $2 billion,” a KIC spokesperson told Infrastructure Investor

The government-led KOIF was set up to help Korean companies win tenders for overseas infrastructure greenfield projects. Its mandate allows it to channel up to $20 billion into projects by providing seed funding.

“The 11 May meeting was attended by heads of local asset managers and securities firms,” the KIC spoksperson said. “But the GP to be selected is not limited to a local entity – it can be a foreign entity.”

The person added that Korean financial services firms are encouraged to co-invest along with state-run banks and KIC. 

KIC is looking to expand its allocation to alternatives from 12.4 percent of total assets to 20 percent by 2020, Eun Sungsoo, chief executive of the $90 billion sovereign wealth fund, said at a press conference earlier this year. 

Korea’s Ministry of Land, Infrastructure and Transport will be closely involved with sourcing investment opportunities, recommending projects with high feasibility to KIC which will then review them before reaching an investment decision. 

While KOIF is not restricted to investing in emerging markets, its pipeline will likely be tilted towards developing countries, where the institution sees a greater abundance of greenfield projects. More specifically, the government views Middle Eastern countries as the largest market for local builders. 

Earlier this month, Korea offered a financial package worth $25 billion to help fund infrastructure projects in Iran, the largest amount Korea has ever proposed to another country, during President Park Geunhye’s state visit to Teheran. Korea Development Bank and Export-Import Bank of Korea have agreed to foot part of the bill, paving the way for Korean state-owned and private enterprises to enter the market.   

Teheran plans to tender nearly $185 billion worth of oil and gas infrastructure projects by 2020, after the signature of new petroleum contracts deemed more favourable to participants from overseas. A member of OPEC, Iran has the world’s largest natural gas reserves.