Key asset owners of South Korea will continue to expand their offshore infrastructure portfolios next year, and renewable energy is their top pick in the sector, a survey of 26 Korean limited partners showed. Traditional energy was the least preferred infrastructure sector, according to the survey.
The Korea Economic Daily has conducted a survey of 26 limited partners in Korea on their alternative investment and manager selections. The LPs manage a combined 381.1 trillion won ($301 billion) in alternative assets, which account for an average of 28.4% of their total AUM. Some 23 of the LPs currently manage 48.9 trillion won ($38.6 billion) in overseas private equity.
To view responses of individual institutions on their alternative asset allocation and fund manager selection, please visit Asset Owners Report.Infrastructure was LPs’ favored asset class. Some 76.9% of the respondents said they will increase their overseas infrastructure investment this year, while 15.4% and 7.7% chose “no change” and “undecided,” respectively. None of the LPs said they will reduce infrastructure assets.
Whether to increase overseas infrastructure exposure
Unit: %
Renewable energy emerged as the most preferred infrastructure sector, the survey showed, with 76.9% of the LPs responding that they will increase exposure to renewables such as solar, wind and hydrogen energy. Private and public partnership (PPP) followed, chosen by 53.8% of those polled.
On the other hand, traditional energy such as upstream, midstream and downstream energy was the least favored sector. Some 53.8% will decrease their exposure to traditional energy -- only 3.8% will increase it, the survey found.
Renewable energy emerged as the LPs' top pick infrastructure sector in
our previous survey during the second half of 2020. In 2019, transportation such as ports, airports, railroads and toll roads was the favorite sector. This year, only 15.4% said they will bulk up exposure to transportation.
Exposure to infrastructure by sector
Unit: %
Among the investment strategies, core plus topped the list picked by 61.5% of the LPs, followed by value-add and core strategies ranking second and third, respectively, scoring 46.2% and 38.5%. Only 3.8% will increase their opportunistic strategy, the survey showed.
Exposure to infrastructure by strategy
Unit: %
By types of funds, primary came first scoring 50% followed by secondaries with 42.3% and debt & mezzanine with 38.5%. None of the respondents plan to reduce exposure to primary or debt & mezzanine fund. Project fund was the least preferred, scoring 26.9%.
Europe topped the favorite region for the LPs’ infrastructure investment. Some 61.5% will increase exposure to Europe, and 50% will expand exposure to North America. Only 11.5% will increase Asia-based infrastructure assets.
Of the respondents, 38.5% plan to invest in four or more infrastructure funds in the next 12 months. Some 19.2% will invest in two infrastructure funds, and 15.4% will bet on three funds. Additionally, 57.7% said earning co-investment, sidecar and collaboration opportunities are important for them. Some 23.1% said these opportunities are less important.
To view responses of individual institutions on their alternative asset allocation and fund manager selection, please visit Asset Owners Report.Participants in this survey are as follows:
Public pensions and SWFNational Pension Service
Korea Investment Corporation
Korea Post - savings bureau
Korea Post - insurance bureau
Government Employees Pension Service
Teachers' Pension
Mutual aids & associationsKorean Federation of Community Credit
Korea Teachers' Credit Union
Public Officials Benefit Association
Yellow Umbrella Mutual Aid Fund
Korea Scientists & Engineers Mutual Aid
Military Mutual Aid Association
Insurance companiesHanwha Life Insurance
Kyobo Life Insurance
Shinhan Life Insurance
Samsung Fire & Marine Insurance
NongHyup Life Insurance
DB Insurance
Hyundai Marine & Fire Insurance
KB Insurance
Mirae Asset Life Insurance
Meritz Fire & Marine Insurance
ABL Life Insurance
Prudential Life Insurance
Lotte Insurance
NongHyup Property & Casualty Insurance
Write to Chang Jae Yoo at
yoocool@hankyung.comJihyun Kim edited this article.
