Teachers' fund nets about $155 mn from Aberdeen's PPP projects

The Korean Teachers' Credit Union (KTCU) has netted a combined 173 billion won ($155 million) from its eight-year investment of A$100.8 million ($77 million) in Aberdeen Asset Management's first PPP infrastructure fund.

Earlier this month, the KTCU had sold its interest in the public-private partnership (PPP) fund for 238 billion won in a secondary market, according to investment banking sources on June 14. 

The South Korean retirement fund decided to divest of the holding, equivalent to a 78.4% stake in the PPP fund, after it received an attractive offer from an unidentified third party, the sources added. 

Including the dividend income of 41.4 billion won it had already received from the PPP fund, the KTCU reaped a net 173 billion won in profits from the investment. 

That translated into a 2.63 multiple of its invested capital and a 17.8% internal rate of return. The IRR is even higher than the typical 6-7% from PPP investments.

Back in 2013, the teachers' fund had contributed A$100.8 million to the PPP infrastructure fund that raised A$138 million in total. The KTCU had committed the capital via Mirae Asset Management Co.

The fund's portfolio consists of three infrastructure assets in Australia and one in the US. In detail, it acquired a 45% interest in the project to build and operate Denver FasTracks, high-speed commuter and light rail lines, for A$24.4 million in 2019.

In Australia, the fund took over a 17.3% stake in the project to build and operate New Royal Adelaide Hospital in Adelaide, South Australia, for A$63.5 million in 2017; 49.9% of Mundaring Water Treatment Plant, Western Australia, for A$24.4 million in 2013; and 25% of the manufacturing and operation of rolling stock in Australia, Queensland New Generation Rolling Stock, for A$26 million in 2019.

After all those assets became operational from late 2019, the KTCU had weighed either exiting the investment or injecting additional money into the fund to raise its interest, until it received the secondary deal offer.

"Given the strong demand for PPP investments globally, it seems that the KTCU sold the stake at an appropriate time with good terms," said an infrastructure investment industry source.

In an interview with The Korea Economic Daily in October 2020, CIO Kim Ho Hyun said that the $30 billion savings fund sets its sights on PPP projects in developed countries, renewable energy and data centers. 

The KTCU's other infrastructure deals include a $130 million investment in a $1 billion seawater desalination facility in San Diego, California in 2015; $100 million in an Australian seawater desalination PPP project in 2014; and $70 million in a PPP project to build outer circular roads in Melbourne, Australia in 2011.