IFM to launch second global infra debt fund for Korean investors

The first fund of this type has invested mainly in BB and BBB- rated loans for projects in the US and Europe.

IFM Investors, the Melbourne-headquartered infrastructure investment firm, plans to launch a follow-on fund totalling as much as $150 million for a global infrastructure debt fund targeting Korean institutional investors, a source familiar with the matter who wished not to be named, told sister publication PDI.

The Australian manager announced yesterday that it had fully invested $140 million on behalf of KDB KIAMCO Global Infrastructure Debt Fund I. The fund was launched in December 2016.

“The first fund’s investment is overseen by both the IFM investors team and that of KDB KIAMCO, mainly targeting BBB or BB rated loans investing in core infrastructure projects,” the source said.

Fund II is expected to focus on ‘core-plus’ infrastructure debt assets in Europe, “which represents an increasingly attractive investment market for Korean institutional investors,” according to an IFM Investors’ statement.

The second fund is expected to be launched in H2.

As the fund series is focusing on both investment grade and sub-investment grade assets across multiple sectors, some Korean insurance firms are considering moving down the credit curve although they could receive beneficial treatment for qualified offshore infrastructure projects with AA-rated infrastructure loans.

“Global infrastructure investment can be an attractive investment destination for institutional investors, such as pension funds and insurers, who seek stable and long-term returns,” Richard Randall, a New York-based executive director and global head of debt investments at IFM Investors, said in the statement.

Samsung Life Insurance, the largest life insurer in Korea, committed $250 million to a global infrastructure debt fund jointly launched by IFM Investors and Samsung Asset Management, as per PDI reporting in January 2017. The fund held its final closing at $480 million.

A spokesperson from IFM Investors declined to comment further on target returns and sectors for the fund series.

KDB KIAMCO is a local asset manager which has set up a domestic fund-of-funds vehicle for Korean institutional investors, according to the source. Korea Development Bank (KDB) owns 84 percent of shares in the asset manager, according to a public disclosure as of end-2017.

KDB is one of three banks controlled by the Korean government along with Export-Import Bank of Korea and Industrial Bank of Korea.

IFM Investors opened a Seoul branch in November 2017 which is headed by Kelly Ki Jeong Lee, a former head of investor relations at Samsung Life.