Korea military fund to put €40 mn into Macquarie’s Europe infrastructure fund

  • 2016-08-18

South Korea’s Military Mutual Aid Association (MMAA) will invest 40 million in Macquarie European Infrastructure Fund 5 (MEIF5) that is aiming to raise  2.5 billion, sources of the military savings fund said on August 18.

The fund managed by Macquarie will buy core and core plus infrastructure assets in Europe, including utilities and communication and transport facilities, and will pay dividends on a yearly basis.

The European infrastructure market is expected to remain buoyant, supported by privatization plans, renewable energy-promoting policies and the Juncker Plan, the European Commission’s large-scale infrastructure investment plan, Also, the good performance of MEIF4, the predecessor of MEIF5, which delivered a 15% return a year, was behind the MMAA’s decision for the new investment, according to the sources.

“(MEIF5) will focus on infrastructure assets which have high regulatory barriers and are being operated under long-term contracts,” online news outlet Moneytoday quoted Jin Woo Kim, MMAA’s head of alternative investment division as saying. “Therefore, the fund will be less vulnerable to economic cycles and produce stable dividend incomes.” He added that its investment in the fund has been currency hedged.

MMAA is aiming to increase the ratio of overseas infrastructure assets to 5% from the current 3% that amounted to 215 billion won ($194 million), compared with its total assets of $8 billion under management.

Other South Korean pension funds also are known to have participated in the fund, but they are not identified.

MEIF5 is managed by Macquarie Infrastructure and Real Assets that oversees $105 billion as at end-March, 2016.

By Donghun Lee

Leedh@hankyung.com 

<Edited by Yeonhee Kim>