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Thai pension fund to invest globally in private equity

The country’s government pension fund will invest about $650m in global private equity and real estate in the coming months.

Thailand’s 380 billion Baht ($12 billion; €7.8 billion) Government Pension Fund (GPF) is hiring a consultant to advise it on the selection of private equity and real estate fund managers globally, Visit Tantisunthorn, the fund’s secretary general, said.

Tantisunthorn said that GPF expects to select about five to six managers for each of the two asset classes by the next quarter.

The fund's existing alternatives portfolio only contains investments made in domestic private equity and real estate, with commitments of 4.5 percent and 4 percent respectively.

Tantisunthorn told PEO that GPF has increased its allocation to alternatives from 8.5 percent to 13.5 percent – 7 percent to private equity and infrastructure, and 6.5 percent to real estate. Of the allocation to private equity, 3 percent will be invested abroad and 4 percent locally. Similarly, 4 percent of the fund’s assets will be invested in domestic real estate and 2.5 percent globally. He said that it could take the pension fund about two years to reach its target allocation.

GPF will look to invest in buyouts, mezzanine financing and infrastructure and will not be investing in venture capital as the “risk profile is not suitable for a pension fund,” said Tantisunthorn. The fund prefers to invest in global and regional private equity funds focussed on North America, Europe and Asia, as opposed to country-specific funds, he added.

Its global real estate allocation will comprise primarily of investments in private real estate funds and REITs.

Earlier this year, the GPF increased its limit on overseas investments to 25 percent of total assets from the erstwhile 15 percent, thus allowing for the addition of global private equity and real estate to its investment portfolio.

Tantisunthorn said that one of the reasons the decision to invest globally in private equity and real estate was taken was to increase investment returns. “We think that private equity and real estate investments are in the range of risks that is acceptable to us and at the same time will enhance the returns for our fund,” he added.

The Government Pension Fund was established in 1997.