The Public Officials Benefit Association (POBA) will commit around 130 billion won ($111 million) to AXA Investment’s 1.4 billion euro ($1.6 billion) European logistics fund during the first half of this year, after it achieved a far better-than-expected investment return in 2019.
POBA took part as the only Asian investor in the fund which has 73 assets valued at 1.4 billion euros across six European countries with an investment period of 10 years, POBA’s chief executive officer Gyeong-Ho Han said in a news conference earlier this week.
The fund, managed by AXA Investment Managers-Real Assets, is expected to return 6.5%. Denmark’s biggest pension fund ATP committed 151 million euros to the new fund as an early investor, according to IPE Real Assets in December.
Last year, POBA earned a preliminary 7.4% return on investments, far exceeding its expected 4.5%.
“Thanks to solid performance in alternative investment markets and bullish stock markets both at home and abroad, our investment return is estimated to reach 7.4% in 2019,” Han told reporters.
The pace of asset growth was faster than estimated at the pension scheme for local government employees. Assets under management climbed to 14.1 trillion won ($12.1 billion) by the end of last year from 12.2 trillion won a year before, compared with the estimated 13.2 trillion won .
For 2020, it is targeting a 4.2% return by increasing the proportion of cross-border alternatives. Alternatives both at home and abroad make up nearly 60% of its AUM which is expected to rise to 15.4 trillion won by the end of this year.
Alternative are likely to return approximately 6% this year, with equities from both domestic and global markets seen to return 17-18%. Fixed incomes are expected to yield about 9%.
The capital commitment to AXA’s logistics fund comes just after POBA, Danish pension fund PFA and Germany’s Patrizia AG co-invested 800 billion won ($670 million) to acquire a logistics portfolio of $1.3 billion in Europe.
In 2019, POBA also launched the second $400 million joint venture with the California State Teachers’ Retirement System (CalSTRS) to invest in debts, a year after they formed the first such venture with a capital of $400 million.
The ventures are managed by PCCP LLC, a Los Angeles-based real estate investment manager.
Separately, POBA committed 48 billion won to PCCP’s latest equity fund which raised $1.3 billion for target returns of 12-14%.
By Hyun-il Lee
<Edited by Yeonhee Kim>