Korean pension to up overseas exposure to alternatives

South Korea’s National Pension Service will reportedly resume its overseas investments from next month and increase its investments in overseas alternative assets.

The W229 trillion ($183 billion; €133 billion) National Pension Service, which suspended its overseas investments last year due to the volatility of the Korean Won vis-à-vis the US dollar, is set to resume investing abroad starting next month.

The pension fund will also invest in domestic infrastructure including logistics and ports, Park Hae-choon, chief executive of NPS, said at the Asian Investor Summit in Hong Kong, Reuters reported.

“We will increase our overseas alternative investments and I think we will do this seriously,” Park said, adding that the pension fund will reduce its exposure to foreign fixed income assets.

Last year, The Blackstone Group, Seoul-based MBK Partners and distressed investment specialist Oaktree Capital Management entered into agreements with NPS to pursue investments in South Korea. Blackstone and MBK agreed to invest $2 billion each, while Oaktree decided to invest $3 billion in the country.

Established in 1987, the pension fund allocated about 3 percent of its assets to alternative assets and about 1 percent to private equity as of 30 October 2008. It started committing capital to domestic private equity funds in 2002 and overseas funds in 2005, according to sister data provider Private Equity Connect.

Elsewhere in the region, China's National Social Security Fund, which manages assets of about RMB563 billion ($82 billion; €63 billion), is presently seeking approval from Chinese regulators to commit capital to non-domestic private equity funds for the first time.