Korea Post’s $112b fund looks overseas to earn better returns

Korea Post president Kang Seong-ju. Photo: Bloomberg

South Korea’s state postal service is planning to buy riskier debt in North America and Europe as well as seeking foreign infrastructure assets and properties as it looks abroad for better returns.

Korea Post plans to increase investment in mezzanine and distressed debt by selecting high-performing asset managers, president Kang Seong-ju said in an interview in Seoul. The $112 billion fund is also adding infrastructure and real-estate assets abroad and putting more money in hedge funds while reducing investment in stocks, according to Kang.

“We didn’t have to look at such debt last year because stock markets were so good,” Kang said, referring to relatively riskier debt.

Korea Post, which manages savings deposits and sells insurance at its mail offices, joins other conservative institutional investors in Asia increasingly wading into riskier alternative assets as they grapple with low interest rates and lackluster equity returns. While Korea Post’s allocation to those assets is still small, the move means it must manage risks posed by lower liquidity and less publicly available information on such investments.

Korea Post has put $760 million in mezzanine and distressed debt, according to Kang. The fund has also invested about $600 million in U.S. collateralized loan obligations though it doesn’t put money in equity tranches due to the higher risk. CLOs pool high-yield, high-risk loans and slice them into securities of varying risk and return.

For more details on Korea Post’s bond investment plan, click here

Kang said he also met with Macquarie Group recently in Australia to boost infrastructure investments. For overseas real estate, the fund is looking to diversify its assets into logistics facilities in the U.S. and Europe.

While Korea Post is reducing equities, the fund still favors some stocks in developed markets including the U.S. and dividend stocks while shunning emerging-market shares, Kang said. The fund also plans to boost investment in hedge funds by 300 billion won to 1.6 trillion won by end-2019, he said.

“Some people say it’s time to buy some beaten-down stocks in emerging markets, such as Vietnam equities, but we are still cautious about emerging markets due to lingering uncertainties,” he said.

(By Heejin Kim, Kyungji Cho and Whanwoong Choi)

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.