KIC looks for European bargains in real estate

Korea Investment Corp., the nation’s $43 billion sovereign wealth fund, said European assets are “attractive” amid the region’s sovereign debt crisis, and it plans to buy more real estate.

Europe’s “got to sell off assets to try to alleviate the burden,” Chief Investment Officer Scott Kalb said in an interview in Seoul yesterday. “We just want to be in a position to buy those assets when attractive opportunities arise. We want to be ready to take advantage of it.”

Asia’s state-owned investment companies, such as Singapore’s Temasek Holdings and China Investment Corp., are diversifying assets as European debt problems and the U.S. economic slowdown threaten to dent returns.

The Korean sovereign wealth fund, also known as KIC, spent about 70 million pounds ($108 million) last month to buy a building in London’s financial district to diversify its portfolio from bonds and stocks. The Seoul-based fund, which refers to property assets as real assets, wants to at least double the portion of such nontraditional investments over the long term from about 10 percent currently, Kalb said.

“The real asset is an important part of the diversification of our portfolio,” said Kalb, whose term is set to end in April. “Real assets provide you with a steady, stable source of cash flow. They also provide you with some kind of inflation hedge.”

To kick off its real-estate investments, the fund will look into small purchases, he said, without elaborating on specific regions.

Kalb ruled out any takeover of European banks, citing the ongoing sovereign debt crisis and strict capital rules set by global regulators.

“European banks have to raise a lot of capital,” he said. “We’d like to see the situation stabilize. We’re not rushing out to buy European banks.”

KIC added $78 million worth of Bank of America shares to its existing stake last year as the Charlotte, North Carolina-based bank shed more than half its market value, the fund said in August. The fund added shares from January in seven separate purchases. Bloomberg