KIC Chief Unveils Plan to Build Korean-Style Sovereign Fund Into Ultra-Long-Term Patient Capital

Park Il-young, CEO of Korea Investment Corp.

"Investing in strategic industries without fixed maturities

and serving as a catalyst for foreign capital inflows"

Park Il-young, CEO of Korea Investment Corp. (KIC), laid out a blueprint for operating a Korean-style strategic sovereign fund. At the center of the plan is to build it into ultra-long-term "patient capital" that can back companies over the long haul without being bound by maturities or liquidation timelines.

In a keynote address at a conference hosted by KB Financial Group and the Alternative Investment Management Association at the Fairmont Ambassador Seoul in Yeouido on Sept. 10, Park said the biggest risk for long-term investors is not market volatility but impatience over returns. Pressing for results too quickly inevitably shortens an investor's time horizon, he said, and a short horizon cannot prepare for the future.

This marks the first time KIC has publicly set out the role and investment philosophy of a Korean-style sovereign fund. In July, the government unveiled a plan to tap KIC's investment capabilities and global network to provide long-term capital to strategic industries including artificial intelligence and semiconductors.

Park described the establishment of a strategic account as the biggest shift since KIC was founded. Until now, it has operated as a savings-style sovereign fund, investing foreign-exchange reserves overseas in foreign currencies. Going forward, KIC plans to broaden that role into a strategic sovereign fund that supplies long-term capital to domestic strategic industries.

He outlined three roles for the strategic account: long-term equity investment with no fixed maturity or liquidation date; catalyst investment, with KIC acting as an anchor to attract overseas capital; and relay investment, supporting corporate growth after policy financing has run its course.

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

KIC also plans to use the network it has built in global investment markets. Park presented a new slogan — alongside the globalization of Korean capital, the Koreanization of global capital — and signaled that the fund would actively attract overseas institutional money.

"Trust itself is capital, and other capital moves with it," he said. "KIC will serve as the catalyst that draws global capital into Korea."

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