2024 Annual Report
Investment Highlights
Investments
Governance & Organization
Alternative Assets
KIC invests in alternative assets, including private equity, real estate,
infrastructure, hedge funds and private debt.
Alternative assets refer to assets not traded in public markets. They are typically characterized by longer investment horizons and lower liquidity compared to traditional assets. They also offer an illiquidity premium and exhibit distinct risk-return characteristics, often resulting in low correlation with traditional investments. As such, alternative assets serve as effective tools for reducing overall portfolio risk and diversifying sources of return.
KIC began investing in alternative assets in 2009 with private equity and has since broadened its exposure to include real estate, infrastructure, hedge funds and private debt. From the inception of its alternative investment program through 2024, KIC has delivered a solid annualized return of 7.7% in this asset class.
Private Equity
Private equity, which enables illiquid, growth-oriented, long-term investments within the alternative asset portfolio, is a strategy that offers higher returns than other asset classes. KIC established its alternative investment division in 2009 and began investing in private equity funds immediately following the Global Financial Crisis. We started making direct private equity investments in 2010 and co-investments with GPs in 2011, diversifying our portfolio by region and strategy.
In 2024, the global private equity market experienced a rebound in buyout activity compared to the previous year, driven by improved conditions for acquisition financing. In the venture capital space, active investment in emerging technologies such as artificial intelligence contributed to higher valuations for related startups. However, investment in regions facing geopolitical risks remained subdued, and the monetization of invested capital continued to be delayed due to a contraction in the IPO market.
In response, KIC aims to secure stable long-term returns by building a well-diversified portfolio across regions and strategies, with a focus on high-quality, defensive assets.
To stay ahead of industrial paradigm shifts and identify promising tech assets early, KIC operates the KIC Venture Growth (KVG) fund, a dedicated venture investment program. KIC also actively pursues direct and co-investment opportunities, selectively investing in mission-critical businesses. With this approach, KIC continues to strengthen its investment analysis capabilities and deepen strategic partnerships with leading investment managers.
Real Estate
Real estate is one of the core alternative asset classes that can help diversify a portfolio. KIC has been making a diverse range of direct, indirect and co-investments in real estate in North America, Europe and Asia since 2010.
In 2024, the global real estate market continued to undergo price corrections, with transaction volumes remaining below historical averages. This trend was largely driven by central banks maintaining relatively high policy rates. However, performance varied by sector. Sectors such as residential, logistics and data centers—where sustained demand growth is anticipated—saw a rebound in transaction activity, reflecting renewed investor interest.
KIC has expanded investments in sectors with favorable supply-demand dynamics, including residential, logistics and data centers. At the same time, it has broadened its investment network by selecting highquality GPs with deep expertise in specific markets and sectors/strategies. Considering the prolonged highinterest-rate environment and broader macroeconomic uncertainty, KIC has also strengthened its asset management practices by proactively monitoring existing holdings to maintain portfolio stability.
Looking ahead, KIC plans to actively take advantage of current market repricing to expand new investments across regions and sectors from a medium- to longterm perspective, with the goal of enhancing overall portfolio returns.
Infrastructure
Infrastructure investments provide essential facilities and services to society while generating stable, long-term cash flows. With natural monopolistic characteristics, revenue structures tied to long-term contracts or inflation and relatively low return volatility across economic cycles, infrastructure is particularly well-suited for long-term investment.
Since launching its infrastructure investment program in 2010, KIC has steadily expanded its portfolio, now investing across a wide range of sectors—including telecommunications, energy, power, renewables, transportation, social and environmental — in North America, Europe, Asia and other regions.
In 2024, inflation showed signs of easing, but interest rates remained elevated, continuing to exert pressure on markets. Nonetheless, long-term global trends such as the energy transition and digitalization remained intact, consistently creating investment opportunities. As the infrastructure market matured, secondary transactions among market participants also continued.
KIC actively tracks market developments to pursue opportunities in regions and sectors aligned with global structural trends. In particular, KIC has worked to diversify its portfolio not only through investments in major infrastructure markets such as North America and Europe and traditional sectors, but also by exploring opportunities in emerging markets and niche sectors.
Going forward, KIC will continue to monitor global macroeconomic trends to respond agilely to infrastructure investment opportunities and to build a stable and resilient portfolio.
Hedge Funds
Hedge fund investments aim to generate stable absolute returns over the medium to long term by building portfolios with low correlation to broader markets. KIC began investing in hedge funds in 2010. Since then, it has delivered complementary performance to other asset classes through a welldiversified portfolio, consistently achieving stable absolute returns over the long term.
Given the sustained high volatility in financial markets, KIC plans to continue building its portfolio around strategies expected to deliver steady absolute returns over the medium to long term.
KIC also supports the overseas hedge fund investments of Korean financial institutions through the establishment of joint ventures, leveraging its diverse hedge fund experience to contribute to the development of Korea’s finance industry
Private Debt
In response to the rapid growth of the private debt market and the expansion of related investment opportunities, KIC began managing private debt as a standalone asset class in 2024.
Private debt typically involves shorter investment horizons than other alternative assets and begins generating cash flows from the early stages of investment, making it a relatively stable source of liquidity. As investments are primarily made in loans to high-quality companies, default rates tend to remain low
KIC’s private debt portfolio is currently in the early stages of construction and is expanding investments in various forms, including direct corporate lending. Looking ahead, KIC plans to continue investing in new strategies to diversify the portfolio and enhance its overall stability.
To further strengthen its private debt capabilities, KIC is also actively expanding partnerships with top-tier asset managers through the establishment of coinvestment platforms.