Korean pension London move boosts infra hopes

The South Korean National Pension Service – the world’s fourth-largest pension fund – says it will open a London office in June, its second foreign office after New York. The pension spent over £1bn investing in the UK last year, including the purchase of a 12% stake in Gatwick Airport.

The world’s fourth-largest pension fund – the South Korean National Pension Service (NPS), with $320 billion of assets under management – said today that it will open a London office in June, as it looks to double its portfolio of foreign investments from the current $36 billion.

The announcement came from the office of UK Deputy Prime Minister Nick Clegg, who met today in Seoul with NPS chair Jun Kwang-woo. NPS’ London office will be its second overseas office after New York and Clegg is hopeful the Korean pension’s move will prove a boon for UK infrastructure.

“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. 

Outside the UK, NPS acquired a 23.44 percent stake in the US’ Colonial Pipeline for $1 billion last year.

The UK government has been keen to court pension fund investment for its decade-long, £250 billion infrastructure plan. It has been particularly keen to attract funding from UK pension funds and has teamed up with the two trade bodies – the National Association of Pension Funds and the Pension Protection Fund – to convince “a dozen of the largest pension schemes” to invest “specifically” in UK infrastructure, UK Chancellor George Osborne said in his budget speech last week.

Osborne hopes UK pensions will be able to provide up to £20 billion for UK infrastructure over the long term, although in the short term, the pensions are likely to launch a dedicated, fully-owned vehicle starting out with some £2 billion in seed capital.