Korea Investment Corporation (KIC) is aiming to increase its direct investment capabilities in private credit after acquiring a passive, non-voting, minority stake in US private credit asset manager Golub Capital and its management companies. The investment marks the sovereign wealth fund’s first direct equity investment in an asset management firm.
The Golub investment is “in line with [KIC's] continued effort to expand alternative assets, broaden asset allocation and enhance investment capability,” a KIC spokesperson told AsianInvestor, adding that “opportunities in direct investment and co-investment are a strategic focus of KIC's long-term growth plan”.
Among KIC’s total alternative asset holdings, direct investment accounted for 32% ($11.6 billion) as at the end of 2021, up from 24% – $2.7 billion higher – in 2015. The spokesperson declined to comment specifically on KIC’s private credit investment strategy.
“Golub Capital has been KIC's external asset manager, and with the established trust in Golub Capital's management team and the firm over the years, KIC has reached this strategic partnership agreement,” the spokesperson said, declining to comment on when Golub started operating as the sovereign wealth fund’s external asset manager.
KIC's assets totalled $176.6 billion at the end of August, with alternative assets accounting for 21.3%. KIC plans gradually to increase its alternative investment allocation to 25% by 2025.
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The sovereign wealth fund’s stake represents an economic interest in Golub Capital’s management companies of less than 5%.
Golub Capital plans to use the proceeds from KIC’s investment to further enhance its ability to deliver financing solutions to private equity sponsors, according to an announcement. All proceeds from the transaction will remain invested in Golub Capital.
Golub Capital’s strategy, management team and day-to-day operations will not change following KIC’s investment, and additional terms of the investment were not disclosed.
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A Golub Capital spokesperson declined to respond to AsianInvestor’s enquiries about what the expansion of the strategic partnership would entail, how Golub would utilise the capital boost from KIC’s investment, and what private credit investment trends Golub would pursue in 2023.
As of October 1, Golub Capital had more than 725 employees and $55 billion-plus of capital under management, a gross measure of invested capital including leverage. The firm has lending offices in Chicago, New York, San Francisco and London.