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Macquarie to raise $1bn for Korean infrastructure fund

The firm's second South Korea-focused private equity infrastructure fund will invest in operating infrastructure assets in sectors such as power and water.

Global financial conglomerate Macquarie Group plans to raise around $1 billion for Macquarie Korea Opportunities Fund II, its second South Korea-focused private equity infrastructure fund, a source close to the firm has told PEI Asia.

Macquarie declined to comment.

The firm is currently marketing the fund, which will primarily invest in operating assets including power and water treatment plants, to  Korean and Japanese and overseas investors, the source said. The fund will also make green investments, the source added.

Macquarie Korea Opportunities Fund I, the fund’s predecessor, raised $1 billion in 2005. It has invested in the country’s ports, city gas and cogeneration power plants. The fund has given investors an average annual cash return of about 8 percent, according to the Financial Times.

In 2002, Macquarie teamed up with Korean financial conglomerate Shinhan Financial Group to set up Macquarie Korea Infrastructure Fund, which was listed on the Korea Exchange in 2006. This fund invests in concession companies which develop or operate infrastructure assets such as airports, toll roads and subways in the country. As of 31 October 2009, it manages assets of about KRW1.9 trillion ($1.6 billion; €1 billion).

Macquarie has bounced back from the financial crisis, in line with recovering equity markets. In November, the world’s largest infrastructure asset manager pegged investments in its listed funds at A$2.37 billion ($2.2 billion; €1.5 billion), approximately A$335 million above their market value. Seven months earlier, the firm reported nearly A$1.5 billion of write downs to its equity investments.