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NPS joins hands with Allianz to eye $2.3b overseas properties

Logos of National Pension Service (top) and Allianz
Logos of National Pension Service (top) and Allianz
South Korea’s largest institutional investor National Pension Service said Monday it has inked a partnership with Germany-based Allianz to co-invest in core real estate assets worth $2.3 billion across the Asia-Pacific region as part of its alternative investment strategy.

The 50:50 fund will target properties in countries such as China, Japan, Australia and Singapore, betting on core opportunities in landmark office buildings, logistics facilities and residential complexes -- or assets carrying low risks that generate stable income.

Allianz is a multinational insurer having a presence in over 70 countries. One out of 10 assets managed by the firm -- worth 740 billion euros ($832 billion) -- is allocated to real estate assets.

The announcement comes in line with attempts by the world’s third-largest public pension fund to widen its exposure to Asia’s developed and emerging markets for alternative investments, in a bid to diversify its portfolio -- now centered on North America and Europe.

“Through a partnership with a like-minded global leading group, NPS will share various investment experiences, create synergies and secure prime investment opportunities to increase long-term returns,” Chief Investment Officer Ahn Hyo-joon said in a statement.

Overseeing 698.34 trillion won ($581.42 billion) assets as of end-March, NPS is eyeing wider exposure to alternative investments -- ranging from real estate to private equities and venture firms at home and abroad. NPS seeks to allocate 15 percent of its total assets under management to alternative investments by 2024, from 12.6 percent in March, according to its latest disclosure. Its alternative investments logged a cumulative 8.2 percent return.

Along with NPS, other Korean institutional investors have sought to tap into overseas alternative investment opportunities by establishing co-investment funds.

The Public Officials Benefit Association has teamed up with US-based pension funds -- California State Teachers’ Retirement System and the Teacher Retirement System of Texas -- to ramp up investments in US real estate debts.

By Son Ji-hyoung (