NPS secures hefty return from first exit of global infrastructure co-investment

  • 2017-07-12

South Korea’s National Pension Service (NPS) has pocketed more than €100 million ($114 million) from the recent sale of a 5% stake in Spain’s leading oil products and storage company to CVC Capital Partners, in its first exit from global infrastructure co-investment.

The world’s third-largest pension scheme sold the shares in Compania Logistica de Hidrocarburos (CLH) to private equity firm CVC, alongside other investors, according to investment banking sources on July 11.

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NPS had bought the 5% stake in CLH for around €100 million in 2011, in co-investment with Ardian, a France-based investment firm. Ardian had owned a combined 25% in CLH, including the 5% on behalf of NPS.

CVC has acquired a 25% stake in CLH from Ardian (10%); two Spanish banks – Kutxabank (5%) and Abanca (5%); and Alberta Investment Management Corporation (AIMCo) which owns 5% on behalf of clients. The equity sale was reportedly valued at €1.5 billion.

After the deal, Ardian retains a 15% shareholding in CLH, one of the world’s largest oil transportation and pipeline operators.

The co-investment generated a net IRR of over 10% and investment gains equivalent to nearly two times initial investment, (or 2 money multiple) for the NPS.

NPS, a $500 billion pension fund, began joint investment with asset managers in 2009. Since then, it has been stepping up co-investment across alternative asset classes ranging from infrastructure, real estate and private equity to buyout deals.

An increasing number of South Korea’s biggest asset owners including Korea Post are joining NPS in seeking co-investments which give them more control over the invested company and save management fees paid to general partners. GPs can share risks from large-scale investments with limited partners.

Last year NPS invested A$500 million to secure a 50-year lease on Australia’s biggest container and cargo port, the Port of Melbourne, in co-investment with China Investment Corporation, Queensland Investment Corporation and the Futures Fund, Australia’s sovereign wealth fund.

Last February it bought a 10% stake in TeamHealth Holdings Inc. for about$300 million in co-investment with Blackstone Groupin in the US hospital staffing company. Two major Canadian pension funds – Caisse de Dépôt et Placement du Québec (CDPQ) and PSP Investment – also participated as co-investors in the deal.

CLH has one of the world largest oil product transportation and storage networks with over 4,000 km of oil pipeline and a storage capacity of more than 8 million cubic meters in Spain. The company also owns the largest oil pipeline network in the UK.

An infrastructure fund of Australia’s Macquarie Group and sovereign wealth funds competed with CVC for the minority stake in CLH which was put up for sale earlier this year.

By Chang Jae Yoo

yoocool@hankyung.com

<Edited by Yeonhee Kim>