KIC Holds Overseas Investment Council Meeting... Discusses Private Bond Investment Strategies

The sovereign wealth fund Korea Investment Corporation (KIC) organized a meeting with domestic public institution overseas investment experts to review the current status of the global private debt market and discuss investment strategies.

On the 22nd, KIC announced that it held the 43rd meeting of the "Public Institution Overseas Investment Council (HaeTuHyeop)" at its headquarters in Jung-gu, Seoul.

HaeTuHyeop is a consultative body established in 2014 under the leadership of KIC to enable synergy among domestic public institutions in overseas investments. Investment officers from central associations, mutual aid associations, and pension funds attended the meeting.

The meeting focused on the private debt market. Private debt refers to an investment method where asset management companies pool funds from institutional investors to lend to companies or real assets. It generally seeks medium risk and medium return.

Gregory Robbins, Vice Chairman of Golub Capital, who gave the presentation, spoke about the U.S. direct lending market. Direct lending is an investment method where fund capital is lent directly to companies, primarily through senior loans.

Vice Chairman Robbins stated, "As the share of traditional banks in corporate financing decreases, direct lending is taking over that role," adding, "As a result, the U.S. direct lending market has been growing at an annual rate of 22% over the past decade."

He continued, "Direct lending offers investors excellent risk-adjusted returns." Since 2005, it has recorded an average annual return of around 10%, outperforming traditional bonds.

Robbins added, "Although interest rates have been rising, the U.S. economic growth rate remains at a healthy level, and mid-sized unlisted companies, which are the main demand sources for direct lending, continue to grow."

Following the presentation, KIC's Absolute Return Investment Office introduced the corporation's private debt investment status and held a discussion with attendees on future investment strategies.

At the opening remarks, Lee Hoon, Chief Investment Officer (CIO) of KIC's Investment Management Division, said, "Private debt assets have grown rapidly since the 2008 financial crisis and have become fully activated as banking industry regulations have tightened," adding, "From the perspective of institutional investors who must generate absolute returns, there will be opportunities to earn stable profits."

KIC plans to hold HaeTuHyeop quarterly to actively share investment information and know-how so that domestic public sector investment institutions can discover global investment opportunities. Currently, a total of 26 domestic institutional investors participate as members of HaeTuHyeop.