KIC’s Next 20 Years: Moving Beyond Earning to Scaling Up

Park Byungkeun, Chairman of the Korea PEF Managers Association

Korea Investment Corporation (KIC) achieved a cumulative investment return of 122.4 billion dollars (approximately 166 trillion won) for the first time last year, surpassing the entrusted principal of 118.6 billion dollars. This marks a milestone 20 years since its inception. Now, questions surrounding KIC must move forward: how can the investment expertise KIC has accumulated overseas be leveraged to drive the growth of Korea’s domestic industries and capital market?

The Strategic Investment Account that the government is promoting for KIC could offer one solution to this question. Particularly, KIC's investment in domestic strategic industries can play four distinct roles.

First is patient capital. In sectors with major industrial impact, such as semiconductors, artificial intelligence (AI), and biotech, it takes a long time to accumulate technology and develop markets. Regular funds with fixed maturity periods cannot sufficiently accommodate investment horizons exceeding 10 years. Thus, direct equity investment, which allows for a relatively long-term approach, is essential. While the National Growth Fund expands the scope of the industry ecosystem through indirect investments and loans, KIC can further strengthen the financial structure by adding patient capital for the long haul.

Second is supplementing market scale. Foreign capital is becoming increasingly prominent in Korea’s large-scale M&A market. While the largest domestic fund stands at around 4 trillion won, some global funds targeting Asia exceed 20 trillion won. It is not easy to close this gap with only private equity fund (PEF) contributions from pension funds and mutual aid associations. To compete with global capital over strategic assets on the trillion-won scale, Korea needs domestically rooted capital, whether KIC joins deals independently or together with local asset managers.

Third is filling policy fund blind spots. Due to tariff barriers and supply chain realignment, Korean companies must now secure overseas business footholds to survive. However, foundational funds such as the Mother Fund and the National Growth Fund are primarily focused on supporting domestic industries. There is still a shortage of long-term capital to facilitate overseas expansion and cross-border M&A. KIC, having invested in overseas assets for 20 years, is well positioned to fill this void. Just as Japan last year earned about 42 trillion yen—approximately 360 trillion won—from its primary income balance alone, generating financial returns abroad also forms an important pillar of national wealth.

Fourth is the anchor effect. KIC is an institution trusted and recognized in the international investment market. Its network with global co-investors, reputation as a long-term investor, and accumulated due diligence experience are vital foundations for trust in individual transactions. The Ireland Strategic Investment Fund (ISIF) executed 9.7 billion euros in direct investments and drew in 13.7 billion euros of additional private capital. The Saudi Public Investment Fund (PIF), serving as an anchor, saw its Middle East fund reach an initial formation size of 2 billion dollars. Transactions with KIC’s participation become a benchmark for foreign investors and, through collaboration with domestic asset managers, create opportunities for sharing global investment experience.

Aligning sovereign wealth fund roles with national industrial strategy, beyond simply securing financial returns, is a global trend. Singapore’s Temasek has recorded a 6.8% return over 20 years, and Abu Dhabi’s Mubadala is responsible for 5.7% of the non-oil GDP, demonstrating how financial returns can be achieved alongside domestic industry development. These two objectives do not necessarily conflict. What matters is designing strategies that strike the right balance—maintaining profit discipline while also pursuing policy effectiveness.

For the next 20 years, KIC should not be content with merely generating income abroad. This should be a period when KIC uses its accumulated investment experience and global network to elevate both domestic industry and the capital market. The performance of a sovereign wealth fund should no longer be measured solely by how much it earns, but also by the industrial and investment ecosystems it leaves behind.

This content was produced with the assistance of AI translation services.