Feb 2, 2010
Korea’s new infrastructure specialist
Korea’s National Pension Service rewrote its mandate from the government to diversify instead of Stocks as the only class of investment. Today, it owns key pieces of the Global puzzle with Macquarie’s GII,(Global Infrastructure Partners ), J P Morgan AMC ( HSBC HQ in Canary Wharf ) and Aurora Place in Sydney. Two out of the three have been real estate but that is just a function of what was available. A pocket of $237 billion can very well be used to exert significant influence and receive extraordinary returns, given the exit of most sophisticated investors of three years ago in structured deals that got them linked to the distant US home mortgages market.
The fund is looking to cap its investments in infrastructure to around $24 billion or KRW 28 Trillion. Another 10% is earmarked for hedge fund led investments. Korea’s GDP rebound suffered but Forex reserves hit an all time high in January. In comparison to Gatwick, the busy airport at Bangalore built afresh still manages only 15 million passengers including LCCs. A 12% stake in the Bangalore Airport would be closer to $350 million around 2.2X
South Korea’s National Pension Service announced Tuesday that it would buy a small stake in Gatwick Airport in London as it seeks to increase its investments abroad.
The pension fund is paying 180 billion won, or $156 million, for 12 percent of London’s second-biggest airport, after Heathrow, which is owned by Global Infrastructure Partners, the private equity fund that bought Gatwick last October from BAA Airports for £1.51 billion, or $2.4 billion.
“We expect the number of travelers at Gatwick Airport will rise in the mid- to long-term, aided by the London Olympics in 2012,” the pension fund said in an e-mailed statement. “We also expect stable cash flow in the long term through efficient management of the airport.”
The pension fund, one of the largest in the world, is South Korea’s biggest investor. It holds about 274 trillion won in assets, and already made news in London when it bought HSBC’s offices in Canary Wharf for £772.5 million in November.
In a deal last month, it bought an office building in Sydney for 750 billion won, and earlier teamed up with Carlyle Group to invest in commercial property in Tokyo.
The fund said last year that it aimed to diversify its portfolio so that by 2014, 10 percent of its equity holdings were overseas, and another 10 percent of its exposure was in alternative investments, which include real estate and infrastructure.
Global Infrastructure Partners, which invests in infrastructure around the world and also runs London City Airport, is controlled by Credit Suisse and General Electric. A G.I.P. spokesman did not return calls for comment, but the fund said last year it would try to bring in minority stakeholders in Gatwick.
Gatwick serves 80 airlines carrying about 33 million passengers per year.
The National Pension Service also gets credit for South Korea’s growing reserves; (from the Peoples Daily in China)
South Korea’s official foreign reserves as of end-January 2010 stood at a record high on the back of operating profits and the redemptions at maturity by the National Pension Service (NPS), the central bank said Tuesday.
According to the Bank of Korea (BOK), South Korea’s foreign reserves as of end-January amounted to 273.69 billion U.S. dollars, up 3.70 billion dollars from the 269.99 billion dollars total at the end of the preceding month.
The January figure broke the record set in November, 2009, when the foreign reserves posted 270.89 billion U.S. dollars.
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