[Edaily Marketin KIM SUNG-SOO Reporter] Ahead of the finalization of the second phase of the plan to relocate public institutions to regional areas, concerns are growing that the Korea Investment Corporation (KIC) may be included in the relocation list.

While the government is pushing for legislative amendments to foster KIC as a “Korean-style Temasek,” a bill explicitly mandating KIC’s relocation to Jeonbuk has been proposed, causing unease among its staff. Given that KIC is a global investment institution, some argue that the law should explicitly designate “Seoul” as the headquarters location to maintain connections with overseas asset managers and ensure the timeliness of information.

In particular, it has been reported that staff have been leaving KIC due to concerns about the relocation to a regional area, raising concerns that securing professional investment personnel could become a critical issue. Since investment professionals account for about half of KIC’s total workforce, there are fears that relocating the headquarters could go beyond a simple change of location and negatively impact the organization’s investment competitiveness.

Fostering

a “Korean-style Temasek”… but will the headquarters move to Jeonbuk?

According to political circles on the 6th, Rep. Lee Seong-yoon of the Democratic Party of Korea introduced a bill on the 21st of last month to partially amend the Korea Investment Corporation Act, stipulating that KIC’s principal office be located in Jeonbuk Special Self-Governing Province.

The controversy surrounding the location of KIC’s headquarters is intensifying in tandem with discussions on the relocation of public institutions to regional areas. The government plans to review the necessity of relocating approximately 350 public institutions located in the Seoul metropolitan area, announce relocation plans during the fourth quarter of this year, and begin the relocations starting next year.

Amid this situation, as an amendment to explicitly stipulate the relocation of KIC to Jeonbuk in law is being pushed forward, voices of concern are emerging within the financial sector.

This is because, given the nature of KIC’s operations, access to global financial markets and its network within the domestic financial sector are critical; if the headquarters were physically distanced from Seoul, it could create significant challenges in securing investment information and maintaining its network of asset managers.

In fact, alternative assets (private equity, infrastructure, real estate, hedge funds, and private debt) contribute significantly to KIC’s overall returns. According to the “KIC 2025 Annual Report (Korean Edition),” alternative assets account for 21.9% of KIC’s investment portfolio, with an annualized return of 8.48% over the past 10 years.

Compared to traditional assets such as stocks and bonds (78.1% of the portfolio, with a 10-year annualized return of 6.83%), alternative assets make up less than one-third of the portfolio but yield higher returns.

Overseas alternative investments lack public secondary markets, and obtaining non-public information through local networks is key to performance. Since frequent contact with global asset managers is essential for KIC to secure overseas alternative investment opportunities, operational efficiency may decline if access to the financial sector in Seoul is limited.

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“Leaving Seoul Would Lead to Talent Flight… and Shake Up Overseas Networks”

Furthermore, KIC’s role is expanding beyond overseas investments to include investments in domestic strategic industries.

To develop KIC into a “Korean-style Temasek,” amendments to the Korea Investment Corporation Act are being pushed to establish a separate “Domestic Strategic Account” that would oversee investments not only overseas but also in domestic strategic industries such as semiconductors, artificial intelligence (AI), and advanced manufacturing.

Consequently, the need for KIC to build a network spanning the domestic financial market and the broader industrial sector is growing even stronger. Furthermore, as collaboration with financial regulators, government agencies, and private investment institutions becomes more frequent, it has been pointed out that if KIC were to leave Seoul, operational efficiency and the speed of decision-making would decline significantly.

Ultimately, KIC’s biggest concern is “securing talent.” As of the end of June, KIC’s assets under management stood at $243.2 billion (approximately 326 trillion won). The total workforce across its Seoul headquarters and five overseas offices is 353, of whom 174 are investment professionals. This means that roughly half of the organization’s workforce is engaged in investment operations.

Compared to the National Pension Service, which has approximately 450 investment staff, KIC’s investment workforce is relatively small. Analysts note that this means the departure of even a single key investment professional would inevitably have a significant impact on the organization.

In fact, it has been reported that some staff members have recently left KIC due to concerns about the organization’s relocation to a regional area. If one person leaves, the remaining staff must take on their workload, which could increase the burden not only on identifying new investment opportunities but also on monitoring existing investment assets.

Industry observers are concerned that if KIC’s relocation to a regional area becomes a reality, there is a possibility of staff departures—particularly among investment managers—to private asset management firms, securities firms, and private equity funds (PEFs).

It could also pose an obstacle to recruiting new staff. Since financial professionals prefer to work in Seoul, KIC’s competitiveness in recruitment would decline if its headquarters were moved to North Jeolla Province. All of this could lead to a decline in KIC’s investment performance.

"Considering Competitiveness… The Possibility of a Relocation to the Provinces Must Be Nipped in the Bud"

The Ministry of Strategy and Finance (now the Ministry of Economy and Finance) had also officially expressed concerns that relocating KIC to the

provinces

would result in significant losses.

Previously, Song Ju-ah, Senior Specialist at the National Assembly’s Planning and Finance Committee, pointed out the following issues in a review report on a bill (Partial Amendment to the Korea Investment Corporation Act) that had been proposed to relocate the Korea Investment Corporation to Jeonju.

According to the report, the Ministry of Strategy and Finance explained, “KIC is a specialized agency for overseas investment,” adding, “We take the position that the losses resulting from a relocation to a regional area would be significant due to constraints on achieving its founding purpose—the continuous creation of national wealth and contribution to the development of the domestic financial industry—as well as operational inefficiencies and a decline in national competitiveness.”

Academic research also lends credence to these concerns. According to a paper titled “Analysis of the Impact of the Relocation of the National Pension Service’s Fund Management Headquarters to a Regional Location on Fund Management Performance,” published in 2021 by the Department of Public Administration at Seoul National University’s Graduate School of Public Administration, the relocation of the pension fund to a regional location had a negative impact on returns in the overseas alternative investment sector.

The paper analyzed performance before and after 2015—the year the relocation of the National Pension Service’s Fund Management Headquarters to Jeonju was finalized—and found that returns in the overseas alternative investments sector fell by 9.5 percentage points (p) relative to the benchmark.

Consequently, there is growing support within the industry for a legal provision explicitly designating “Seoul” as the location of the Korea Investment Corporation’s (KIC) headquarters to prevent a recurrence of such setbacks.

According to Article 4, Paragraph 1 of the current Korea Investment Corporation Act, the location of the corporation’s principal office is to be determined by its articles of incorporation. Since the law does not explicitly designate Seoul, the relocation of the headquarters is possible based on government policy; proponents argue that this risk must be preemptively eliminated.

An official in the financial investment industry stated, “Relationships with foreign general partners (GPs) are crucial for KIC, and the organization frequently conducts overseas business trips and hosts visits from foreign asset managers.” The official added, “From the perspective of foreign asset managers who typically visit key Asia-Pacific countries—such as South Korea, Japan, and Singapore—in a single trip, there is a high likelihood they would be reluctant to visit KIC if it relocates to Jeonbuk due to time constraints and reduced accessibility.”

The official continued, “In this scenario, KIC’s access to quality investment opportunities from overseas asset managers would be cut off, reducing its competitiveness compared to pension funds and sovereign wealth funds in other countries.” He emphasized, “If the government intends to develop KIC into a ‘Korean-style Temasek,’ it must prioritize the organization’s competitiveness. During the amendment process of the Korea Investment Corporation Act, it is necessary to explicitly stipulate that the main office be located in Seoul to resolve the controversy over relocation to a regional area at its root.”