South Korea plans to inject over 1 trillion won (approximately $707 million) into a newly established sovereign wealth fund next year, with a primary focus on artificial intelligence and other strategic industries. This move aligns with a global trend of governments mobilizing investments to gain a competitive edge in high-tech sectors.
Min Kyung-seol, South Korea's Deputy Finance Minister for Innovation and Growth, stated on Tuesday that while specific details are confidential, the investment scale for next year could range from 600 billion to 1 trillion won. He added that the final investment amount might exceed initial estimates, depending on identified targets and capital requirements. Min also clarified that the fund currently has no plans to directly invest in Samsung Electronics and SK Hynix, two chipmakers that have become key pillars of the global AI boom.
The new fund will target AI, robotics, energy, and other sectors, specifically focusing on post-Series B companies. Last month, South Korea announced it would inject 20 trillion won into the Korea Investment Corporation (KIC) for investments in AI, data centers, and infrastructure. Min noted that this new fund will grant KIC independent strategic investment authority, separate from its traditional role of managing foreign exchange reserves.
The fund will also target robotics, energy, batteries, and grid infrastructure. Nuclear power, space, and quantum technology are also under consideration. In terms of investment strategy, the new fund will focus on companies that have moved beyond the early startup phase, particularly those with mature business models entering Series B funding rounds and beyond. Additionally, the fund may acquire stakes in companies or projects when other investors seek to exit, a strategy Min described as a "relay investment."
As of the end of last year, KIC managed assets totaling $232 billion. Min stated that the new fund will operate separately from traditional fund management activities, with its own independent investment strategy and objectives. He added that, unlike KIC's existing foreign exchange reserve fund, which only invests capital abroad, this new fund will make long-term direct equity investments both domestically and internationally.
South Korea's move comes as global sovereign wealth funds are accelerating their push into AI-related assets. Abu Dhabi's Mubadala Investment Company is considering investing 1 trillion yen (approximately $6.3 billion) to build data centers in Japan, while Singapore's Temasek Holdings is reportedly participating in pre-IPO financing for Shenzhen-based data center optical connectivity provider Adtek. Amid the global rush for AI assets, South Korea is taking a pragmatic yet ambitious approach: avoiding early-stage risk-taking and instead acting as a "relay runner" for mature sectors and a "guide" for global capital.
Min revealed that sovereign wealth funds and pension fund investors from the Middle East, Europe, and North America have already approached the South Korean government to discuss potential investments in Korea and the possibility of co-investing with the new fund. He declined to identify specific investors, noting that discussions are still in early stages. "Various public funds are indeed in operation, and we are actively exploring ways to establish a unique positioning for this fund," he said.
Regarding overseas investments, Min stated that the fund will target critical minerals, resources, and other assets that can help strengthen South Korea's strategic supply chains. It may also cooperate with domestic funds and professional investors to advance related investments. The South Korean government will set the overall strategic priorities through a fund operating committee, while KIC's board of directors and investment committee will handle specific investment and allocation decisions. Min emphasized that the government will not intervene in individual transactions. "We are working to establish a sovereign wealth fund that serves as an anchor investor, helping to attract investment to South Korea and co-investing with leading global investors," Min concluded.
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