Pension funds restart overseas alternative investment

The National Pension Service (NPS), sovereign wealth fund the Korea Investment Corporation (KIC) and other South Korean pension funds have resumed alternative overseas investment after they were disrupted by the spread of Covid-19.

However, many are trying to reduce risks from the virus by using video conferencing systems instead of on-site visits, or skipping due diligence, the Korea Economic Daily reported on Sunday (July 19).

Citing sources in the financial investment industry, the newspaper said the Korean Teachers’ Credit Union had adopted new guidelines that allow video conferencing to be used when due diligence is conducted on overseas alternative investments to commit to global blind pool funds. The Public Officials Benefit Association and MG Korean Federation of Community Credit Cooperatives would be skipping due diligence or replacing it with video conferencing platforms on a case-by-case basis.

The report said that KIC had also recently revised its internal rules to replace due diligence on investment targets with video conferences or conference calls in cases where physical visits were not allowed.

NPS, the world’s third-largest pension fund, has been beefing up alternative investments, including a $2.3 billion joint venture with Germany’s Allianz SE to invest in core real estate in Asia that was sealed last month. NPS also joined forces with APG Asset Management NV to acquire a majority stake in a toll road operator in Portugal for 3 billion euros in May.

It is estimated that NPS poured up to 9 trillion won ($7.5 billion) into overseas alternatives in the first half of the year, including re-investments of matured funds, the report said. (Reporting by Kyoungho Lee)