South Korea’s institutional investors seeking stable long-term returns in the midst of domestic private equity fund (PEF) mismanagement scandals are putting more money into PEFs that invest in overseas special assets, Mail Business News reported on July 14.
According to the Korea Financial Investment Association, balances in PEFs investing in non-property assets such as roads, logistics centers and power plants in advanced nations such as the United States, Europe, Australia and Japan, soared 1.8 trillion won ($1.5 billion) over the past month, growing at the fastest pace this year.
The gain boosted the entire investments in overseas PEFs to 3.27 trillion won in June, a lot closer to the 3.4 trillion won recorded in February before the outbreak of coronavirus in Korea, the report said.
In recent years investments in foreign infrastructure have been gaining popularity as they are safe and deliver high returns.
Overseas special asset funds managed by domestic PEFs drew about 4 trillion won per year on average from 2016 to 2017 but the amount continued to rise, surpassing 10 trillion won in 2018 and 19 trillion won in 2019. This year the funds drew about 6.1 trillion won by the end of June, with the outstanding balance rising to 52 trillion won. (Reporting by Jinwon Lee)