IFM Investors closes two infra debt funds in South Korea on $420m

The two vehicles, co-managed by Hanwha Asset Management and Hyundai Investments, have received commitments from eight South Korean insurance firms.

Melbourne-based IFM Investors has held its final close on two infrastructure debt funds totalling $420 million after receiving commitments from eight South Korean insurance companies.

The two vehicles will be locally managed by Hanwha Asset Management and Hyundai Investments, a wholly-owned subsidiary of Hyundai Marine & Fire Insurance, while offshore investments will be sourced and managed by IFM, it said in a statement.

A source with direct knowledge of the arrangement confirmed that the Hanwha-managed vehicle stands at $190 million, while the other totals $230 million.

The funds will target debt investments in OECD countries, “with a focus on assets where investment risk can be minimised through government subsidies or strong contracted revenues to support debt repayments,” IFM said. Capital has already been deployed from both vehicles into an operating combined-cycle gas plant located in the US.

Both strategies will aim to invest in senior infrastructure debt, the source told Infrastructure Investor.

A second source said that Hyundai Marine & Fire Insurance is one of the LPs committing to the fund managed by Hanwha Asset Management, while Hanwha Life Insurance and Hanwha General Insurance are investing in the Hyundai Investments-managed vehicle.

The source said that both vehicles are targeting an IRR of 5-6 percent.

“We believe that IFM is an excellent partner for Korean insurers,” Young-Chul Lee, Hyundai Investments’ chief executive, said in the statement. “It pursues a stable and low-risk strategy at an appropriate return level, while the market is facing an increasingly challenging environment where the demand from Korean insurers for global alternative investments is getting more diversified.”

IFM declined to comment. Hyundai Investments and Hanwha Asset Management were not immediately available for comment.

The asset manager has become one of the main beneficiaries of South Korean LPs’ increasing appetite for global infrastructure debt strategies. It has attracted commitments of over $1 billion from Korean insurance firms during the past three years, the statement said.

In 2017, the fund manager raised $480 million for a vehicle jointly launched with Samsung Asset Management, including a $250 million commitment from Samsung Life Insurance, according to Infrastructure Investor’s database.

The Australian asset manager also raised $140 million through KDB KIAMCO Global Infrastructure Debt Fund I, launched with the asset management arm of Korea Development Bank in 2016. A follow-on fund of up to $150 million was expected to be launched during the second half of 2018, a source told sister publication PDI at the time.

For a list of infrastructure debt funds closed between 2015 and 2019 YTD, click here.