The world’s fourth-largest pension fund, the South Korean National Pension Service (NPS), with $320 billion of assets under management, will open a London office in June as it looks to double its portfolio of foreign investments from the current $36 billion.
Other pensions active in both private equity fund investments and direct investments have also set up London offices in recent years, such as the Ontario Teachers' Pension Plan and the Canada Pension Plan Investment Board.
Korea's NPS frequently invests in private equity funds and partners on co-investments, for example last year it paid $1 billion for an oil and gas pipeline from Chevron alongside Kohlberg Kravis Roberts. The pension also plans to increase its alternatives allocation to more than 10 percent by 2014.
This week's announcement about the London office came from UK Deputy Prime Minister Nick Clegg, who was in Seoul to meet with NPS chair Jun Kwang-woo. NPS’ London office will be its second overseas office after New York and Clegg was hopeful the Korean pension’s move will prove a boon for UK infrastructure investments in particular.
“This is fantastic news which has the potential to bring considerable investment to the UK and create a significant jobs boost back home,” Clegg said, adding that “investment in infrastructure is a virtuous cycle, growing our manufacturing and construction sectors and making Britain more attractive for further investment”.
Hinting that the UK government will be seeking further foreign investment for its infrastructure plans, Clegg said: “We’re ramping up our sales pitch abroad – Britain’s open for business. We’re making sure the UK doesn’t miss out because investors don’t know what’s on offer or about our long-term strategy to deliver world-beating infrastructure.”
NPS was active in the UK infrastructure and real estate markets last year, spending £100 million (€120 million; $159 million) buying a 12 percent stake in London’s Gatwick Airport from Global Infrastructure Partners, the US infrastructure fund manager. In the real estate space, it bought HSBC’s Canary Wharf headquarters for £773 million as well as a pair of smaller purchases for a combined £268 million.