Korean investors on track to pour nearly $1 bn into US, UK airports in 2019

South Korean institutional investors are on track to pour nearly $1 billion into US and UK airports in 2019, including the planned $51 million co-investment in the John F. Kennedy Airport’s Terminal One redevelopment project.

For the Terminal One project for which the Carlyle Group is leading financing of about $13 billion, Seoul-based STIC Alternative Co. Ltd. is targeting to raise $51 million from Korea for co-investment, according to investment banking sources on Sept. 20.

The fundraising comes after STIC Alternative had collected $51 million from Korean institutions, including Hyundai Marine & Fire Insurance Co. Ltd. and NH Investment & Securities, earlier this year, to commit to Carlyle Global Infrastructure Opportunity Fund.

Its limited partners are provided with co-investment opportunities for the Terminal One in proportion to their commitment to the latest global fund.

The infrastructure fund raised $2.2 billion in its final close in July, and the Terminal One at JFK Airport is one of projects Carlyle is financing with the fund.

Among the LPs, Hyundai Marine, which had committed $25 million to the Carlyle infrastructure fund, recently invested an additional $35 million in the Terminal One project as a co-investor through STIC Alternative.

NH Investment and Kyowon Invest Co. Ltd., a unit of Korea’s private education company, are expected to participate in the second $51 million fund for the JFK Airport, according to the sources. (For details, see Table below)

The growth outlook for air traffic and the safety of airport infrastructure facilities as an asset class lured Korean institutional investors into the global airport investments.

Earlier this year, South Korean brokerage companies had underwritten a combined 669 billion won ($563 million) of debts to finance the third runway construction at London’s Heathrow Airport.

Most of them were resold to domestic insurance companies.

“Insurance companies, which chase long-term assets, rushed to the products because they guarantee annualized 5% returns on top of currency hedging premiums with a term of up to 15 years,” a Mirae Asset Daewoo source told the Korean Investors.

For an equity investment for a 2.85% stake in London’s Gatwick Airport in June, underwriters Hanwha Investment & Securities Co. Ltd. and NH Investment had raised 280 billion won from pension and retirement funds in less than two months.

“Airports as an investment asset have a similar safety to government bonds. Core infrastructure such as airports will never break apart in the air although their operators go bankrupt,” said Hanwha Asset’s alternative investment head Gyeong-il Huh.

By Hyun-il Lee

hiuneal@hankyung.com

(Photo: Getty Images Bank)