Korea Post to invest in overseas data centers and warehouses

Korea Post will increase its alternative investment from 13.6 trillion won ($11.3 billion) at the end-2021 to 16.7 trillion won ($13.9 billion) in 2026, as well as expanding the asset proportion from 9.4% to 10.4%, said Korea Post President Son Seung-hyun in an interview with The Korea Economic Daily on Feb. 7.

Son, who has built most of his career in the Ministry of Science and Technology of Korea since 1994, was named as the new president last December. The third-largest institutional investor of South Korea, after National Pension Service and Korea Investment Corporation, manages a combined 142 trillion won ($118.3 billion) assets as of the end-September of 2021. The AUM comprises 83.7 trillion won in its savings arm and 58.3 trillion won in the insurance arm.   

The savings arm and insurance arm respectively gained 4.6% and 5.9% return from investment in 2020. The postal service basically pursues low-risk and low-return investment for stable fund operations. However, it will gradually increase its mid-risk and moderate return in response to the post-pandemic era, said Son.

“We plan to increase overseas real assets to hedge against inflation and volatility this year. Particularly, we are looking for data centers and logistics centers in developed countries,” Son said.

It targets more than a 6% return from alternative investments while considering direct investments in alternative assets via its New York office this year, Son added.

Son said Korea Post will continue to invest in startups and environmental, social and governance to expand its public service roles and enhance profitability. It has allocated 660 billion won for startup investment for this year, including 60 billion won in venture capital. ESG investment will expand from 5.9 trillion won in 2021 to 8.1 trillion won this year and 11 trillion won in 2023.

“We will induce mid and long-term investments by increasing the current maturities: 2.7 years for the savings arm, except equity investment, and 9 years for the insurance arm,” the president said. The insurance arm is responsible for Korea Post’s main VC investments due to the longer maturity, he added.

Korea Post's overseas investment has increased nearly fivefold over the past decade, from 8.7 trillion won in 2011 to 40.3 trillion won in 2021. In addition to revving up overseas alternative assets, it plans to expand overseas equities and bonds. It targets raising the overseas equity proportion from the current 4% to 4.8% and the proportion of bonds from the current 18.7% to 19.6% by 2026.

To intensify its fund operations, Korea Post is hiring more external investment professionals. “We increased the number of investment management staff from 63 to 71 last year, including eight external professionals,” said Son. “We will enhance investment efficiency with more professionals from outside by supporting them to settle into our organization,” Son said.