The proportion of offshore assets in the National Pension Service (NPS)’s alternative investment portfolio has gradually increased for the last four years, according to its latest annual report, released on Monday (August 10).
In 2019 offshore assets accounted for 70.6% of the South Korean state pension fund’s total alternative investments, such as real estate, infrastructure and private equity, compared with 68.1% in 2018, 66.7% in 2017 and 65.5% in 2016. Its overall allocation to alternative assets, both domestic and abroad, remained steady at around 11.4% in the same period.
The upward trend in foreign alternatives coincides with efforts by the pension scheme to diversify its portfolio through an increased exposure to overseas assets, while moving away from traditional financial assets such as stocks and bonds.
Investments by NPS in the U.S. real asset market included a stake of about 29% in Manhattan skyscraper One Vanderbilt, acquired in 2017 from the building’s developer SL Green for approximately 600 billion won ($506 million). The pension fund also participated in Cheniere Energy’s liquefied natural gas export terminal project in Corpus Christi, Texas.
In Singapore’s real estate market, NPS acquired a stake of about 50% in Frasers Tower, a 36-story office building in the central business district, from Frasers Property for $327 million in 2019. The building’s tenants include tech giant Microsoft, global insurance company Pacific Life and Japanese conglomerate Sumitomo.
Among NPS’ alternative investments in the European market was Plumtree Court, the 10-story London building which serves as Goldman Sachs’ European headquarters. The pension fund bought the building from the investment bank for 1.17 billion pounds in a sale and leaseback deal in 2018. Ahn Hyo-joon, NPS’ chief investment officer, also participated in the opening ceremony of the building during his business trip to Europe in June 2019.
NPS had 736.7 trillion won in total assets under management at the end of 2019, according to the report. Its offshore alternative assets stood at 59.5 trillion won, up by 7.3 trillion won year-on-year. Investments in real estate, infrastructure and private equity accounted for 40%, 26% and 34% respectively in these assets. (Reporting by Hee-yeon Han)