KIC Missed Two CIOs, Who Were Hired by NPS and Teachers’ Pension [fn Market Watch]

[Financial News] While Korea Investment Corporation (KIC) was forced to restart its search for a Chief Investment Officer (CIO), candidates who had made its shortlist went on to lead the investment operations of major pension funds. After Baek Ju-hyun was appointed CIO of Teachers’ Pension, Lee Gyu-hong was selected as head of the National Pension Service (NPS) Fund Management Division. KIC failed to make a final choice in its first CIO recruitment, while other pension funds found their answer in the same pool of candidates. Attention is now turning to the outcome of KIC’s renewed search after it abandoned its first recruitment. According to investment banking (IB) and pension fund industry sources on the 15th, the National Pension Service (NPS) officially appointed former Teachers’ Pension Fund Management Division head Lee Gyu-hong as its new CIO, effective that day. The new CIO will oversee the management of more than 1,800 trillion won in retirement assets belonging to the Korean public.
Teachers’ Pension had previously selected Baek Ju-hyun, former head of the Government Employees Pension Service’s asset management division, as its new CIO in July. Baek, who has worked at both insurance companies and public pension funds, is responsible for managing approximately 30 trillion won in Teachers’ Pension assets.
Coincidentally, the two had competed against each other for KIC’s next CIO position just three months earlier.
KIC launched an open recruitment process for a CIO in May and shortlisted four candidates, including Lee Gyu-hong and Baek Ju-hyun, as well as Lee Kyung-jik, former head of NPS’s overseas securities division, and Kim Jung-nam, former managing director of APG Asset Management’s Hong Kong office. However, rumors that a particular candidate had been selected in advance spread through the market around the time of the interviews. KIC ultimately abandoned the recruitment without selecting a final candidate. It was the first time since KIC’s establishment that a CIO recruitment process ended without a final appointment.
In the meantime, the candidates’ value was confirmed by other institutions. Baek first moved to Teachers’ Pension, and Lee has now taken charge of investments at NPS, the country’s largest institutional investor.
Some in the IB industry view the developments as more than simple personnel changes. While KIC was unable to make a final decision amid controversy over its procedures, other pension funds assessed the investment experience and expertise of candidates from the same pool and appointed them as CIOs.
A senior pension industry official said, "Because the capabilities and selection criteria required of a CIO differ from one institution to another, it is difficult to make a simple comparison," adding, "The fact that the two candidates who reached KIC’s final shortlist were subsequently appointed CIOs at major pension funds suggests that the candidate pool was not lacking in competitiveness."
Meanwhile, attention from within and outside the IB industry is turning back to KIC. Following the failure of its first recruitment, KIC has restarted the process of appointing its next CIO. Although who is appointed matters for a position overseeing roughly 350 trillion won in national wealth assets, IB industry observers say the bigger question is whether KIC can secure competitive candidates and complete the final selection without controversy this time.
Another senior IB industry official noted, "Putting good candidates on a shortlist and actually appointing a good CIO are two different matters," adding, "Since the candidates from the first recruitment were subsequently chosen by other institutions, KIC’s second appointment process will inevitably be judged by the market not only on its outcome but also on how it is conducted."
[email protected] Kim Kyung-ah Reporter