South Korea’s IGIS Neovalue targets private wealth for new fund

While fundraising has become more difficult domestically, the firm has seen growing interest from investors in Singapore and the Middle East.

IGIS Neovalue Asset Management, the investment manager jointly owned by South Korea’s IGIS Asset Management and developer Neovalue, plans to launch its first USD-denominated fund to tap into family offices’ growing interest in real estate.

With a fundraising target of $200 million, the firm will invest in value-add and development projects in South Korea’s industrial and office sectors through the upcoming vehicle. PERE understands that IGIS Neovalue is looking to launch the fund in October this year and is in talks with both family offices and institutional investors.

This would be the second commingled fund and the first USD-denominated vehicle introduced by IGIS Neovalue. The first fund was an onshore KRW-denominated development fund that closed on $50 million in 2021, with capital from domestic investors. It has been fully deployed across four assets in the office and co-living sectors in South Korea.

Junho Pok, co-chief executive officer at IGIS Neovalue, told PERE that interest from foreign investors to invest in South Korea prompted the firm to launch a USD-denominated fund. He added that family offices in Singapore and the Middle East see a window of opportunity to buy high-quality assets while many institutional investors are slowing down deployment in the country because of current macroeconomic headwinds.

Indeed, the proportion of private wealth capital in total commercial real estate transactions increased from 28 percent in 2020 to 38 percent in 2022, and this investor group is expected to become even more active in 2023, according to a PERE report.

In addition, he noted it has become more difficult to raise capital from domestic investors amid a cautious attitude to new investments due to the interest rate hikes in the country. Currently, South Korea’s benchmark interest rate stands at 3.5 percent, the highest level since November 2008.

“I think the repricing will come eventually. So this is not a good time for aggressive investments, but it is a good time for fundraising from those with liquidity. We can prepare for potential adjustments and opportunities to come,” Pok noted. He expected the new fund to have an initial focus on acquiring and repositioning troubled assets until the costs for ground-up developments have come down.