South Korean institutional investors seeking stable return on investment are considering investment in German-based Allianz Global Investors’ fund targeting infrastructure assets in North America where a growing number of aged power plants require replacement.
According to investment bank sources on Monday, domestic institutional players including insurers and mutual aid associations are reviewing a plan to join a $500 million worth infrastructure senior loan fund to be formed by Allianz Global. The fund, which will mainly invest in renewable energy facilities including solar and wind power farms in North America and other regions, guarantees stable investment in assets with a credit rating BBB or above and is expected to deliver a return of relatively low 4 percent per annum.
The expected return on investment in the fund is not high because the fund will invest in core infrastructure assets in North America with low risk, said an unnamed official at one of local institutional investors that are mulling investment in the fund.
Local institutional investors are rapidly turning to overseas infrastructure markets including North America where demand for replacing aging power plants is growing. Recently, domestic pension funds, insurers and other major institutional investors agreed to team up with a Switzerland-based Partners Group to invest more than 200 billion won ($174 million) in an infrastructure fund operated in Europe and North America.
By Kang Doo-soon
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