S Korea pension fund NPS allots $433m for real estate investments

Visual from NPS website

South Korea’s National Pension Service (NPS) has allotted up to $432.8 million (500 billion won) to its domestic real estate ventures.

NPS has tapped the services of Samsung SRA Asset Management Co and IGIS Asset Management Co to manage the fund, the Pulse reported.

The pension body is looking at creating investor pools to invest in office buildings secured with credible tenants.

The real estate assets will complete making investments within the next two years and run for 10 years.

Whenever the fund has decided on a buy target, a letter of commitment will be issued to the investor pool.

Committed capital of up to 70 per cent is allowed, while credit finance cannot exceed 60 per cent. An annual yield of over 7 per cent has been fixed. However, investors will be paid of bonus returns within 1.5 per cent of additional profit if the fund yields internal rate of more than 8 per cent.

NPS oversees $430 billion in assets. Only recently, it named four private equity firms to manage 700 billion won ($607 million) of its funds.

VIG Partners, Skylake Investment, Lindeman Asia Investment and SG Private Equity, were tasked by NPS to run its private equity fund (PEF).

VG Partners and Skylake Investment will manage investment in large-cap companies with 250 billion won of entrusted funds for each, while Lindeman Asia and SG Private Equity will be allocated 100 billion won each to invest in mid-sized companies.

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