Samsung Asset Management Co. Ltd. will launch a $500 million blind-pool fund investing in infrastructure-backed debt in developed countries, and jointly manage the fund with Australia’s IFM Investors, according to local newspaper reports.
The biggest asset manager in South Korea has already raised about 400 billion won ($343 million) from its life insurance affiliate and two other unidentified South Korean institutional investors, and aims to complete the fundraising by end-March, the Maeil Business Newspaper said on Jan. 24, citing investment banking sources.
Samsung Life Insurance Co. Ltd. has committed $250 million to the fund which will mainly target roads, airports, power plants and water facilities in the US, Europe and other regions for an expected annual return of about 4%.
IFM Investors, with A$70 billion of fund assets, will work on deal sourcing. The fund, to be terminated in 2040, is tipped to be the biggest private global infrastructure fund raised in South Korea, according to a MoneyToday report. Samsung Asset manages about $180 billion in assets.
“We positively considered the proposal of investing in the fund, given that many of Australian asset management firms, including Macquarie, specialize in the infrastructure sector,” a source of a South Korean institution which committed to the fund told the daily. “As uncertainties about global financial markets grew after the US rate increase, we decided in investing in the debt fund which is expected to generate a steady stream of cash flows, regardless of market conditions.”
With US president Donald Trump calling for increased infrastructure spending, investors expect that the US administration may privatize existing infrastructure assets to secure capital for new infrastructure facilities.
But competition is intensifying for infrastructure assets, pushing their valuations higher as global asset managers have been launching a string of infrastructure-investing funds.
In November 2016, IFM Investors teamed up with South Korea’s KDB KIAMCO, the infrastructure-investing arm of a state-run bank, to raise a $100 million global infrastructure debt fund. Major South Korean insurance companies, including Nonghyup Life Insurane Co. Ltd., Mirae Asset Life Insurance Co. Ltd. and Dongbu Insurance Co. Ltd., had participated in the fund.
<Edited by Yeonhee Kim>