Korean LPs ‘more comfortable’ with core strategies

Korean investors’ interest in global infrastructure has continued to grow, particularly over the past 12 months, with private pensions, insurance companies and investment banks being “more aggressive” in pursuing overseas infrastructure equity opportunities, Truston Asset Management’s head of alternative investments Jade Changsuk Ok told Infrastructure Investor.

However, “not every infrastructure strategy is welcome in Korea”, he said. “Core infrastructure, including mainly regulated utilities, renewables and public-private partnerships, are better received among Korean investors,” Ok, who helps Korean LPs invest in overseas infrastructure funds, noted.

According to Ok, limited internal resources and the complexity of investing in infrastructure overseas have been the biggest obstacles for local investors, even those who have exposure to the asset class domestically.

Challenges aside, he pointed out what Korean investors are looking for – core infrastructure strategies. Co-investment opportunities would be appreciated for those who wish to raise capital from Korean saving pools, he said.

Ok, who was formerly head of global infrastructure at National Pension Service of Korea, joined the Korean asset manager in November 2016 as the Seoul-based firm decided to expand its investment universe to alternative investments from its core focus on traditional asset classes such as equities and fixed income.

Responding to market demand and clients’ requests, Truston launched an alternative investment platform in 2016, led by Ok, helping Korean LPs commit a total of $300 million to overseas real assets, including infrastructure.

The firm groups several LP commitments into a fund-of-funds structure dedicated to one single infrastructure fund or transaction. One of the first transactions under this strategy is understood to be a combined $150 million commitment made by three Korean LPs in June last year in Macquarie Infrastructure Partners IV, a vehicle Macquarie Infrastructure and Real Assets is currently raising. According to Infrastructure Investor data, the fund reached a first close on $3.3 billion last August and is targeting a final close of $3.5 billion.

In 2018, Truston Asset Management will continue to work on several commitments from domestic LPs which are looking to invest in several Europe-focused vehicles that invest in infrastructure debt, renewables, and PPP transactions, Ok said.

As of February, the Seoul-based firm’s assets under management totalled $8.7 billion, with 80.9 percent allocated to equities. Its alternative investments accounted for 0.6 percent of the total, with the remainder allocated to fixed income.