Wednesday, June 22, 2011

$300 Billion Korean Pension Fund Goes Wall Street

Korea Joongang Daily reported:

Korea’s National Pension Service, the world’s fourth-largest pension fund manager, today is opening an office in New York City, its first overseas location.

“The New York office will establish a close network with global pension funds and institutional investors, collect market information to discover new investment opportunities, and take various roles to raise the NPS’s international competitiveness,” said Jun Kwang-woo, chairman and chief executive officer of the NPS.

The list of invitees is a who's who of PEU's.

About 150 bigwig financial figures will attend an opening ceremony tonight at the New York Palace Hotel, including NPS Chairman Jun, Citi Group CEO Vikram Pandit, Blackstone Group CEO Steve Schwarzman, Carlyle Group CEO David Rubenstein and JP Morgan Private Bank CEO Mary Erdoes. The event will be an attempt to cement a global network of financial experts to help NPS diversify its international investments.
 Nearly $300 billion in NPS assets will attract a crowd.  WSJ reported:

The NPS is also looking for higher returns overseas and has been particularly active in foreign real-estate purchases for a few years. Last year it spent around 2.6 trillion won on real-estate and infrastructure in several countries, including the 180 billion won purchase of a 12% stake in the U.K.'s Gatwick airport and a $1 billion deal with Kohlberg Kravis Roberts & Co. to buy a 23.44% stake from Chevron Corp. in Colonial Pipeline, the largest refined-products pipeline in North America.

The interest in energy dovetails with a key concern for South Korea, which imports most of its energy and competes with large resource-hungry countries like China and India for energy assets. South Korea, Asia's fourth-largest economy, plans to have 30% of its oil and gas imports in 2019 come from its own assets overseas, compared with 9% in 2009.

For this year the NPS plans to invest a total of $10 billion overseas, of which $6 billion will be in equities and fixed-income securities and $4 billion in alternatives.

The  $4 billion in alternative overseas assets includes infrastructure investments, with several possible investments in the U.S.  Will they pair up with PEU's or go their own in bidding on infrastructure deals?  I bet the former, given the invitee list.