The National Pension Service (NPS) will improve the role of its overseas offices in New York, London and Singapore to increase direct investment in alternative and global assets, in an effort to boost the share of cross-border investments to 40% from the current 29%, its chief executive said on May 29.
The $580 billion pension scheme has relied on outside management companies to make alternative investments which accounted for 10.7% of its 624 trillion won ($580 billion) AUM as at end-February. By comparison, it has already expanded direct investment in equities markets.
“As part of an effort to achieve our goal of 40% for global investments and 10% for alternative investment and expand direct investment in global markets, we focus on strengthening the function of our overseas offices,” Sung-joo Kim, CEO and chairman of the world’s No.3 pension fund, said in a keynote speech for the ASK 2018 Global Private Debt & Equity Summit.
The summit was hosted by the Korea Economic Daily in Seoul on May 29.
“In particular in the alternative investment sector, we will make the most of the overseas offices’ local advantages and continuously strengthen their function to make local investments, including expanding project-based co-investments.”
For example, the London office is being given a mandate to lead investment in distressed and special situation strategies as well as secondaries deals, Hyung Don Choe, head of the NPS’ global private equity division, said in an LP panel discussion during the conference.
New York office is empowered to lead co-investment and large to mid-cap investment in the US market, he added.
NPS runs three overseas offices in New York, London and Singapore.
Earlier in 2017, NPS revised internal regulations on its Investment Management’s foreign offices with a view to empower them to source deals and submit direct investment proposals to the fund’s committees.
The move comes as a growing number of South Korean pension and retirement funds are keen on building in-house capabilities for global investment, following a similar trend of pension funds in developed countries.
NPS aims to bring the proportion of cross-border assets to 40% or higher by end-2022 when its AUM is projected to reach 1,000 trillion won.
Overseas investments represented 29% of AUM as at end-February, valued at 180 trillion won.
Additionally, NPS will gradually expand responsible investment as a public fund and help domestic asset managers expand global business.
“While making efforts to build long-term partnerships with global asset managers, we will continuously strengthen cooperation with capable domestic investment companies and serve as a stepping stone of their global expansion in the long term,” Kim noted, without elaborating further.
By Chang Jae Yoo
<Edited by Yeonhee Kim>
(Updated on May 30 to add sixth and seventh paragraphs from top)