KB Asset raises €165 million to invest in €1 bn Mirova infrastructure fund

KB Asset Management Co. Ltd. has closed a domestic fund at around €165 million to invest in a €1 billion infrastructure fund of Mirova, an investment arm of France’s Natixis Asset Management, attracting South Korean pension funds and insurers including KB Insurance Co. Ltd.

Mirova began fundraising for Mirova Core Infrastructure Fund (MCIF) II last year which targets mainly public private partnership (PPP) projects such as transportation, broadband networks and energy facilities, according to the Maeil Business Newspaper last week.

A source with knowledge of the matter confirmed the report, saying that the fund will invest in France and continental Europe, excluding the UK, and pursues average returns of 8% to 9% over a 25-year period.

The fund seeks a stable long-term dividend income, rather than investing in projects under development for capital gains from a future sale.

Its prior fund, MCIF I, reportedly had raised €700 million to invest in brownfield infrastructures. It has invested not only in traditional infrastructure assets, but in schools, hospitals, correction facilities and zoos for a 25-year investment period.

The upcoming fund will likely employ the same strategy.

KB Asset, part of South Korea’s biggest banking group KB Financial Group, has been arranging investment in US LNG power plants, including $140 million syndicated loans for a power facility in Pennsylvania, for domestic insurers and pension funds.

Earlier, it acted as a domestic placement agent for a global infrastructure fund of Australia’s AMP Capital which raised more than $2 billion to invest in infrastructure-backed subordinated debt.

South Korean insurance firms are increasingly piling into infrastructure assets to lengthen asset durations. In particular, PPP projects in developed countries will alleviate their burden of capital requirements because of low risk coefficients applied to them.

By Daehun Kim

daepun@hankyung.com