* Partnership with other state funds seen as good for
growth * Korea to lift real estate, hedge fund investments-
By Ju-min Park
SEOUL, Sept 9 South Korea plans to inject more
than $5 billion into Korean Investment Corp (KIC) next year as
the soverign wealth fund looks to extend overseas partnerships
and boost investments, a government official said.
The $35 billion Korean fund, set up in 2005 to help manage
assets entrusted by the government and the Bank of Korea, is
one of the world's smallest state wealth funds. In comparison,
China Investment Corp (CIC) has some $300 billion in assets.
"Partnering with big state funds will help us grow more
quickly," the official told Reuters late on Wednesday.
"Together we also want to invest in the Korean market,
which is currently not allowed due to regulations."
The official declined to be named because he was not
authorised to talk to media.
He said the government also planned to increase investments
in alternative assets such as real estate and hedge funds by
$1.5 billion to 20 percent of its investment holdings.
A KIC spokesman on Wednesday said the fund is eager to team
up with other state-run funds. He said he could not confirm
whether KIC would receive more than $5 billion from the
government next year.
KIC made headlines in 2008 after buying a $2 billion stake
in Merrill Lynch. The U.S. bank's value later fell below its
purchase price amid a global financial crisis that also saw the
collapse of investment bank Lehman Brothers.
KIC agreed in July to invest $100 million dollars in a
Chinese infrastructure fund led by Bank of China and Singapore
state investor Temasek.
In June, KIC announced a $200 million investment in
Chesapeake Energy Co (CHK.N), the U.S. No.2 natural gas
company, along with CIC and Singapore state investor Temasek
Holdings [TEM.UL] for an undisclosed amount. [ID:nTOE65K069]
Analysts say that sharing investments in overseas assets
with other sovereign wealth funds is a low-risk strategy for
KIC posted a return of 18.7 percent in 2009, equivalent to
about $4 billion, after losses of 13.7 percent in 2008.
(Reporting by Ju-min Park; Editing by Dhara Ranasinghe)