Private Credit Set to Transform Financing Landscape, Says KIC CEO

Private credit is poised to become a significant asset class, offering a vital financing solution for small and medium-sized enterprises (SMEs) facing diminishing bank lending options. This perspective was articulated by Park Il Young, chief executive of the Korea Investment Corp. (KIC), during a keynote address at the ASK 2025 global conference on October 29.

In his remarks, Park emphasized that private credit will evolve beyond its traditional role as a mid-risk, mid-return investment. He stated, “Private credit will position itself as a structural solution to fill the void left by banks.” As demand for private debt surges, it is increasingly appealing to medium-sized companies seeking additional capital and high-growth firms willing to accept higher risk premiums.

KIC has reclassified private debt as a distinct asset class for 2024, reflecting its commitment to increasing exposure in this segment. The shift comes as global economic conditions compel businesses to seek alternative financing avenues.

Market Dynamics and Caution on AI Investments

In the realm of private equity, KIC identifies ongoing opportunities in sectors experiencing rapid transformation, particularly those driven by artificial intelligence and digital innovation. Companies positioned to benefit from declining interest rates also attract KIC’s interest. Nonetheless, Park urged caution regarding the current market exuberance surrounding AI technologies.

He highlighted economic slowdowns in developed economies, which have been exacerbated by US tariff increases and rising geopolitical tensions. “Market predictability remains at very low levels,” Park noted, adding, “Navigating today’s market requires sharper calculations than ever.” His comments echo those made by Kim Tae-hyun, Chairman of the National Pension Service, during the same conference.

ASK 2025, which took place on October 29-30 at Corad Seoul, serves as a vital platform for investment discussions, addressing emerging trends and challenges in the market.

Investment Focus Areas: Real Estate and Infrastructure

KIC is particularly optimistic about long-term investment prospects in the real estate sector, specifically targeting prime assets in Asia that have recently seen price corrections. The sovereign wealth fund also anticipates significant opportunities in infrastructure, with a strong emphasis on renewable energy and digital infrastructure.

Regionally, KIC expresses a favorable outlook on investments in North America and Europe, citing robust demand and liquidity as key factors driving their interest. Park underscored the growing importance of collaborating with external investment firms and asset owners, highlighting that cross-border strategic partnerships have become commonplace in the global alternative investment market.

“A new competitive landscape is taking shape, driven by expanded purchasing power through large-scale fundraising and synergies created by sharing investment expertise,” he concluded.

As the investment landscape evolves, KIC’s strategic focus on private credit, real estate, and infrastructure positions it well to navigate the complexities of contemporary financial markets.