CapitaLand Investment Closes First Korea Private Credit Fund at $130M

Singapore’s CapitaLand Investment has teamed up with a South Korean investment bank to raise KRW 180 billion ($130 million) for its first private credit fund in Asia’s fourth-largest economy.

In a statement on Thursday, the Temasek-backed giant said it has reached a final close on CapitaLand Korea Investment No. 1 Private Equity Fund (PEF), which will invest in construction, asset-backed or mortgage loans for asset classes including data centres, lodging, office and residential in South Korea’s gateway cities.

CapitaLand has teamed with Korea Investment and Securities (KIS), a subsidiary of Korea Investment Holdings, as co-general partners in the private equity fund, according to the statement, with the closing bringing the Singaporean firm’s funds under management in South Korea to S$3.1 billion ($2.32 billion).

“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,” said Matthew Sohn, chief executive of CapitaLand Investment Korea.

Eyes on Korea

With government regulators scrutinising bank lending to property projects in the wake of defaults by some of Korea’s largest construction companies, Sohn positioned the fund as an alternative source of financing for the real estate sector.

“Despite the gradual decline in interest rates, South Korean banks have been reducing their proportion of real estate estate loans in their portfolio,” Sohn said. “As traditional lenders in South Korea become increasingly conservative, the widening funding gap creates opportunities for private lenders.”

CapitaLand holds an 11 percent sponsor stake in the fund, with the partners having already deployed a KRW 40 billion loan for a 30MW KT Corp data centre in western Seoul’s Guro district being developed by conglomerate SK Group’s SK Ecoplant construction and engineering unit.

The Singaporean firm entered South Korea in 2002 and manages a portfolio in the country that includes office buildings, logistics facilities, and lodging properties. Including CapitaLand Korea Investment No. 1 Private Equity Fund (PEF), CapitaLand said in the statement on Thursday that it now manages 16 private funds in the country with its total funds under management in the country at S$3.1 billion

In announcing its KRW 200 billion final close on a value-add office fund targeting the South Korea market in August last year, CapitaLand said that vehicle represented its eighth private fund in the country, with S$3.3 billion in funds under management in the country.

CapitaLand’s first private credit strategy for Korea comes after Hong Kong-listed ESR entered the country’s private lending market in October last year, raising $325 million targetted for investments in logistics facilities, data centres and infrastructure.

Private Credit Expansion

CapitaLand Investment is entering Korea’s private credit market after acquiring the property and corporate credit investment management business of Australia’s Wingate Group for A$200 million ($127.6 million) in December last year.

A month before the Wingate acquisition, CapitaLand Investment closed on A$265 million for its Australia Credit Program (ACP), in partnership with Wingate.

In the third quarter of 2024, CapitaLand Investment’s revenue from managing its 39 private funds management grew 14 percent to S$95 million.