Korea Development Bank (KDB) and Korea Investment Corp.(KIC) have agreed to help Korean firms’ operations overseas. A fund will be jointly set up partly with the purpose of globalizing Korean corporations at this time when the AIIB (Asian Infrastructure Investment Bank) is ready to start its operation to finance the infrastructural projects in Asian countries.
At the KDB’s head office in Yongdeungpo District in Seoul on Sep. 23, KDB and KIC signed an agreement to create a joint fund of around $2 billion to assist Korean firms.
The agreement stipulates that the two financial organizations will provide financial support when it comes to infrastructure projects that the Korean firms will take charge of in the form of project financing.
Both KDB and KIC will work together to find projects in foreign countries for Korean firms so that they can undertake them with financial support or direct investments in the projects. They will also provide information on overseas projects and the business environment by country, in addition to direct investments on the projects.
KDB Chairman Hong Ky-ttack said the agreement between KDB and KIC will be a stepping stone for the financial community in Korea to overseas advancement.
Korea Development Bank (kdb) is a wholly state-owned policy bank in South Korea. It was founded in 1954 in accordance with The Korea Development Bank Act to finance and manage major industrial projects, to expedite industrial development and enhance the national economy.
As Korea’s representative development financing bank, No. 1 arranger in Asia-Pacific project finance market and leader of domestic capital market, KDB has fostered the growth and heightened the competitiveness of strategic industries by meeting their changing financial needs. Following public policy, KDB facilitates the management normalization of troubled companies through corporate restructuring and consulting services, and provides capital for strategic regional development projects.
Through a network of forty domestic branches, seven overseas branches, five overseas subsidiaries, two representative offices, and three domestic subsidiaries, KDB provides a full range of financial services. It has more than 2,100 employees.
Korea Investment Corporation (KIC) was established in 2005 to preserve and enhance the long-term purchasing power of South Korea's sovereign wealth through efficient management of public funds in the international financial markets. KIC manages assets entrusted by the Government, the Bank of Korea, and other public funds as defined under the National Finance Act. KIC directly invests the entrusted assets or re-entrusts the assets to external managers. KIC's Total assets under management stood at USD 64.5 billion at the end of 3rd quarter 2013.
The traditional asset portfolio pursues stable risk-adjusted returns by investing in publicly traded securities, mostly stocks and bonds.
The global financial crisis of 2008, the U.S. credit rating downgrade in 2011, and the fiscal crisis in Europe temporarily dampened returns on traditional assets. Nevertheless, the traditional asset portfolio delivered a return of 11.83 percent in 2012, outperforming the benchmark by 66 basis points, amid global policy collaboration to revive the world economy. The cumulative return over the past five years is 3.72 percent (annualized), which is 3bp higher than the benchmark.
Alternative Investments
Alternative investments have a different risk/return profile compared with traditional asset classes. KIC invests in alternative assets as a way of complementing investment in traditional assets. Alternative investments usually comprise assets that have low liquidity and are based on private contracts. KIC began investing in private equity and real estate/infrastructure in 2009, and expanded the scope of investment to hedge funds in early 2010. In 2012, KIC expended and diversified investment in alternative assets to pursue consistent and stable returns.
_산은 홍기택 02.jpg)
