Macquarie’s North America infra fund to attract $180 mn from Korea

Korean Teachers’ Credit Union (KTCU), Public Officials Benefit Association (POBA) and other South Korean asset owners will commit 200 billion won ($180 million) in aggregate to Macquarie’s fourth North America infrastructure fund which is expected to reach 4 trillion won ($3.6 billion), according to a newspaper report.

Those Korean investors, which also include ING Life Insurance Korea Ltd. and Meritz Fire & Marine Insurance Co. Ltd., will allocate 50 billion to 70 billion won respectively to the infrastructure fund which targets annual returns of between 10% and 15%, the Maeil Business Newspaper said on June 6.

They will invest through a fund launched by South Korea’s Truston Asset Management Co. Ltd.

The latest Macquarie fund will chase prime infrastructure assets in North America ranging from transportation, energy and communications facilities to harbors and airports.

“Migration of people to major big cities in the US and Canada will likely continue through 2040. Thus their aged infrastructure is in urgent need of maintenance and upgrade,” a source of a Korean institutional investor participating in the fundraising told the daily.

“Given that their central and municipal governments are not in good financial conditions, they are in desperate need of global private capital,” the source added.

Infrastructure is a most favored asset class among South Korean asset owners seeking a steady stream of cashflows over a longer period of time.

Loosened regulations on Korean insurers’ overseas investments, including a cut in reserve requirements for cross-border infrastructure assets, are also behind strong demand for infrastructure.

National Pension Service, Military Mutual Aid Association, Korea Scientists and Engineers Mutual-aid Association and Yellow Umbrella Mutual Aid are understood to have committed €25 million to €210 million respectively to Macquarie European Infrastructure Fund 5 (MEIF 5) which raised €4.0 billion in its final close last September.

Daepun@hankyung.com