South Korea expects to deploy more than 1 trillion won ($707 million) of fresh capital into a new sovereign wealth fund targeting AI and other strategic industries next year, joining a global push by governments to mobilize investment and gain an edge in high-tech sectors.
“It is difficult to go into details but investments next year could range from 600 billion won to more than 1 trillion won,” Min Kyung-seol, South Korea’s deputy finance minister for innovation and growth, said in an interview with Bloomberg Television on Tuesday. The final investment figures could exceed the initial estimate, depending on the targets identified and their capital needs, he said.
Min said there are no plans at this point for the fund to invest directly in Samsung Electronics Co. and SK Hynix Inc., the two chip-makers that have emerged as key pillars of the global AI boom.
South Korea last month said it would inject 20 trillion won into Korea Investment Corp. for investment in artificial intelligence, data centers and infrastructure. The new fund will add a separate strategic-investment mandate alongside KIC’s traditional management of foreign-exchange reserves, Min said.
It will also target robotics, energy and batteries, as well as infrastructure such as power grids, he said. Nuclear power, space and quantum tech are also among areas under consideration.
See more: How To Build Your Very Own Humanoid Robot
Min said sovereign wealth funds and pension investors from the Middle East, Europe and North America have already approached the government about potential investments in South Korea and potentially co-investing with the new fund. He declined to identify individual investors, saying discussions remain at an early stage.
The fund will focus on companies beyond the early startup stage, particularly those with proven business models that are entering the Series B or later funding rounds. It may also acquire stakes in companies or projects when other investors seek to exit, a strategy Min described as “relay investment.”
KIC, which managed $232 billion in assets at the end of last year, will operate the new fund separately from its traditional management, and Min said it will have its own investment strategy and mandates. Unlike KIC’s existing mandate for FX reserves, which only channels capital outside of the country, the new vehicle will make long-term direct equity investments both at home and abroad, he added.
The move comes as sovereign wealth funds globally direct more capital for AI-related investments. Abu Dhabi’s Mubadala Investment Co. is weighing spending 1 trillion yen ($6.3 billion) to build a data center in Japan, while Temasek Holdings Pte has been eyeing a pre-IPO investment in Shenzhen Adtek Technology Co., a provider of optical connectivity products used in data centers.
“It is true that various types of public funds are in operation, and we are actively exploring ways to establish a distinct role for this one,” Min said.
For overseas investments, the fund will target critical minerals, resources and other assets needed to strengthen South Korea’s strategic supply chains, Min said, and it may pursue such spending alongside local funds and specialist investors.
Min stressed that the government would set only broad strategic priorities through the fund’s operating committee, while KIC’s board and investment committees would make individual investment and allocation decisions. The government would not intervene in specific deals, he said.
“We are pursuing the establishment of a sovereign wealth fund that would serve as an anchor investor, helping to attract investment to South Korea and co-invest alongside leading global investors,” Min said.
A message from Advisor Perspectives and VettaFi: Discover something new! Click here to register for our upcoming webcasts.
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
More Innovative ETFs Topics >
