NPS opens for business in London

The $320 billion pension fund has indicated it will open an office in London in June. The pension service, which has invested heavily in real estate of late, only has one other office outside of Korea in New York.

Korea’s largest state fund, the National Pension Service of Korea, is to open only its second overseas office, according to an announcement by the UK government’s Deputy Prime Minister Nick Clegg. The announcement follows a meeting between the Liberal Democrat leader and NPS’ chairman Jun Kwang-woo.

“The new London office of the South Korean National Pension Service, which will open in June, will play a key role as the fund expands its overseas investment,” Clegg’s office said in the announcement. “It represents a huge opportunity for significant investment in UK real estate, infrastructure projects and equities.”

The office is the second overseas office to be opended by NPS. The first was in New York.

NPS has invested more than £1 billion (€1.2 billion; $1.6 billion) in the UK over the last two years. Its largest real estate transaction was the £773 million acquisition of HSBC’s Canary Wharf headquarters in 2009. It also invested in two central London offices via a separate account mandate with
Rockspring Property Investment Managers.

In the infrastructure space, NPS picked up a 12 percent stake in London’s Gatwick Airport from Global Infrastructure Partners for £100 million in February 2010. After that investment, Jun Kwang-woo said: “We consider that investments in the UK represent a good buying opportunity despite a relatively slow recovery from the global crisis.”

“If you look at the property market around the world, according to our analysis, Great Britain has already undergone quite a substantial correction, more substantial than many other places around the globe.”

According to today's announcement, NPS plans to “almost double its overseas portfolio of $36 billion”. Its global real estate investing strategy is currently to increase its approximately $6 billion of assets under management by between $1.5 billion and $2 billion a year for the foreseeable future. Its overall real estate assets under management is valued at closer to $9 billion, including Korean real estate.

One of the ways NPS plans to increase its exposure to global real estate is via opportunity real estate funds. PERE revealed in February how it had committed $300 million to the latest global opportunity fund of The Blackstone Group. At that time, a further two commitments were slated to be made after consultants had been hired to select investment managers.

The plan to increase its global real estate footprint is part of a wider strategy to increase its alternative assets under management to reflect 10 percent of total assets by 2015.