NPS forms co-investment partnership with Dutch pension

The National Pension Service has formed a strategic alliance with Dutch pension fund manager APG, through which they recently made co-investments in Australia and Europe, NPS said on Oct. 20.

Under the alliance, they carried out 50:50 investments in student housing facilities in Australia in August and Portugal’s largest toll road operator in October. The South Korean pension fund provided no further detail on those deals.

“Given the heated competition for attractive investment deals and cross-border travel restrictions caused by the COVID-19 pandemic, NPS has put its priority on expanding (communications) channels with major institutional investors to secure decent investment opportunities,” NPS said in a statement.

In June, NPS launched a $2.3 billion fund with Germany’s Allianz SE to make 50:50 investments in core real estate in Asia.

NPS, the world’s No.3 pension scheme, has been pursuing co-investments with global institutional investors since Ahn Hyo-joon led the 777 trillion won ($682 billion) pension scheme as chief investment officer in October 2018. His two-year term was extended by one year until October 2021.

APG is the biggest pension fund manager in the Netherlands. It oversees 538 billion euros ($633 million) in assets as of the end of 2019, including those from ABP, the Dutch pension fund for government and education-sector employees.

Earlier this year, NPS acquired an 81.1% stake in Portugal’s toll road operator Brisa Auto-Estradas de Portugal S.A, for 3 billion euros. The investment was made through a vehicle owned by a consortium with APG Asset Management NV and Swiss Life Asset Management AG, 

NPS also invested A$300 million ($211 million) in a core fund managed by Australia’s largest student housing operator Scape Australia, along with APG, Allianz Real Estate and AXA Investment Managers, IPE Real Assets said last month. The fund has acquired four projects in Australia.

UPPER HAND IN DEAL SOURCING

“By forming a partnership with a like-minded global institutional investor, NPS expects to share investment experience in real assets and gain the upper hand in securing prime investment deals, with a competitive advantage in terms of investment amount and costs,” CIO Ahn said in the statement.   

“NPS will strengthen cooperation with leading global institutions to bolster long-term investment returns.”

Ronald Wuijster, APG Asset Management’s CEO, also said in the statement that their partnership will help the Dutch pension fund access attractive deals it cannot afford alone.

APG is one of the global institutions Ahn tapped as a joint investment partner. Since 2019, he has visited major pension funds and management companies, including Canada’s CPPIB and Ontario Teachers’ Pension Plan, GIC and Temasek of Singapore, Dutch pension fund APG Asset Management NV and Japan Post, to discuss co-investments.

Korean pension and retirement funds have been pushing for co-investments with global institutions to overcome employee shortages and a lack of information and expertise in overseas investment.

Co-investing with general partners will likely give asset owners more control over the invested asset and generate higher yields, as well as saving fees.

Write to Jung-hwan Hwang at jung@hankyung.com
Yeonhee Kim edited this article.