By Choi Kyong-ae
The Korea Investment Corporation (KIC) has invested a combined 400 billion won ($330 million) to buy stakes in U.S. hotels as the Korean sovereign wealth fund seeks to diversify its investment portfolio, people familiar with the deal said Monday.
The KIC as a strategic investor has recently signed separate deals to invest in six five-star hotels, including Manhattan’s Ritz Carlton Hotel and San Francisco’s Four Seasons’ Hotel, they said.
“The deals are part of a long-term strategic investment and do not involve management control of the hotels,” one of the people said.
On top of traditional assets such as equities and bonds, the KIC has increased its alternative investments by acquiring stakes in hotels and commercial complexes in recent years.
In its major overseas investments last year, the KIC bought a 300 billion won stake in Potsdamer Platz, a commercial mall in central Berlin, and acquired a majority stake in the Intercontinental Hong Kong Hotel in a consortium with Gaw Capital Partners, a Hong Kong-based private equity real estate fund management.
A KIC spokeswoman declined to comment on the deals.
In a New Year’s speech delivered on Jan. 2, 2014 to its employees, the KIC’s former Chairman and CEO Ahn Hong-chul said the KIC will partner with Asia’s sovereign wealth funds to seek investment opportunities in the region.
The KIC built a research center in Seoul in early 2014 to make “research-based investment” and is mulling over establishing its third overseas office in China to promote local investments in addition to its two offices in New York and London, the wealth fund said.
Ahn stepped down in November last year after the KIC came under criticism due to its extravagant spending despite its worsening performance. The top post has yet to be filled.
In an annual National Assembly inspection of the state wealth fund on Oct. 2 last year, Ahn was questioned about the fund’s expenditures for his business trips and declining investment gains since he took the helm at the wealth fund in 2013.
KIC currently manages about 100 trillion won in its fund that it set up with some of the finance ministry’s foreign exchange stabilization funds and the central bank’s foreign exchange reserves.