CapitaLand Investment Limited (CLI), a real asset manager, closed South Korea private credit fund with a total equity commitment of KRW 180 billion (S$169.2 million), “increasing its funds under management in its focus market of South Korea to S$3.1 billion.”
The CapitaLand Korea Investment No. 1 Private Equity Fund (PEF) will invest in construction, asset-backed or mortgage loans “for diversified asset classes such as data centre, lodging, office or residential in gateway cities in South Korea.”
CLI has formed a partnership with Korea Investment & Securities (KIS), a subsidiary of “a financial conglomerate Korea Investment Holdings, to manage PEF as co-general partners.”
CLI holds an 11% sponsor stake in PEF, which is “in line with its asset-light strategy to grow its funds under management while keeping strong alignment with investors.”
PEF has deployed a KRW 40 billion loan “for the development of a data centre in Guro, Seoul.”
The Guro district is “a key data centre cluster in the west of Seoul, five kilometres from Yeouido Business District.”
The cluster hosts several cloud companies “as well as IT and financial companies.”
With positive demand-supply dynamics and 30 megawatts of power secured, the data centre is “positioned to capture demand when completed in 3Q 2028. SK Ecoplant, which has a credit rating of A-, will deliver the project and provide completion guarantee.”
SK Ecoplant is the construction and engineering arm of SK Group – “one of the largest conglomerates in South Korea.”
KT Cloud Corp., a subsidiary of South Korea’s telecommunications giant KT Corp, will “lease and operate the data centre.”
Matthew Sohn, CLI’s Chief Executive Officer for Korea said:
“The strong institutional participation in PEF is testament to the network and trust CLI has built over more than 20 years of operating in the country. Leveraging CLI’s deep understanding of South Korea’s real estate investment landscape across multiple asset classes, we are able to expand our suite of fund products and identify suitable investment opportunities to meet investors’ demand.”
Sohn added:
“CLI has been fast-tracking its growth in private credit and its entry into South Korea’s private credit segment is in line its investment strategy that focuses on the theme of ‘Disruption’. Despite the gradual decline in interest rates, South Korean banks have been reducing their proportion of real estate loans in their portfolio3. As traditional lenders in South Korea become increasingly conservative, the widening funding gap creates opportunities for private lenders. Through our strategic partnership with KIS, the combination of our deal-sourcing, fund management and private credit expertise will position PEF for success. We see strong potential to scale our private credit portfolio in South Korea and remain committed to delivering long-term value for our capital partners.”
The launch of PEF in South Korea follows CLI’s announcement in December 2024 to “acquire Wingate for A$200 million5 (KRW 182.6 billion).”
Wingate is one of Australia’s private credit investment managers.
With the addition of Wingate, CLI will “expand its private credit business and its portfolio in Australia.”
Wingate will enlarge CLI’s proprietary deal origination networks and enhance its “access to more institutional and private high net worth investors.”
In November 2024, CLI also announced the “close of its Australia Credit Program (ACP).”
Conceived and originated in partnership “with Wingate, ACP is CLI’s A$265 million (KRW 241.9 billion6) maiden credit fund.”
With the addition of PEF, CLI manages “16 private funds in South Korea.”
In August 2024, CLI closed “a value-add office blind pool fund in South Korea with total equity commitment of KRW 200 billion (S$188 million).”
The private fund is a partnership “with KB Bank, an affiliate of the country’s largest financial group, KB Financial Group.”
In September 2023, CLI’s regional core-plus fund, CapitaLand Open End Real Estate Fund, acquired “a completed, high specifications logistics property Anseong Seongeun Logistics Centre for S$112 million (KRW 119.1 billion7).”
CLI’s portfolio in South Korea comprises “offices, logistics facilities, lodging properties, self-storage and data centres8. CLI has nine serviced residences and hotels, with more than 2,400 units in Seoul, Busan, Cheongju, Incheon and Jeju, through its wholly owned lodging business unit, The Ascott Limited and its lodging trust, CapitaLand Ascott Trust.”