NPS abolishes Korea-focused alternatives teams for global push

  • 2020-01-09

The National Pension Service (NPS) has abolished Korea-focused teams under the three investment divisions of private equity, real estate and infrastructure to place them in newly-created Asia teams, as part of its push to boost global investment.

Under the recent reorganization, the three alternatives divisions now consist of three teams focused on Asia, Europe and the US respectively, instead of domestic and global teams, according to financial industry sources on Jan. 8.

At the same time, NPS renamed the private equity investment division to “private equity and venture investment” division, reflecting the growing trend of venture capital investment in so-called unicorn start-ups, or private firms valued at over $1 billion.

“Dividing alternative investments into domestic and overseas meant that NPS could not help but invest in non-prime assets in order to meet the investment quota every year,” a former NPS senior official told the Korean Investors.

“Now that the domestic investment teams are expanded under the name of Asia team, lots of such problems will be resolved. The pace of alternative investment growth with focus on overseas markets will accelerate, too.”

Expected yields from domestic real estate and infrastructure have declined sharply due to intensifying competition for prime assets.

For traditional assets, NPS runs two separate equity market teams for domestic and global portfolios, while the fixed income team does not split domestic and overseas investments.

NPS has 11 divisions led by three heads for strategy, risk management and back office under CIO Hyo-Joon Ahn.

Overseas alternative assets at the $610 billion pension fund more than doubled in five years to 58.1 trillion won ($50.1 billion) at the end of September 2019, from 24.5 trillion won in 2014.

In comparison, domestic alternatives edged up to 24.5 trillion won versus 22.2 trillion won during the same period.

Meanwhile, CEO Sung-joo Kim quit last week to run in April’s general election, one year before his three-year term ends.

As ex-lawmaker of the ruling Democratic Party, Kim had led the effort to move NPS investment deparment’s headquarters to his district of  Jeonju.

By Jung-hwan Hwang and Sang-yeol Lee

<Edited by Yeonhee Kim>

(Photo: Getty Images Bank)