Korea’s National Pension Service (NPS) is expected to issue two new mandates of about KRW600bn (€457m) in coming weeks, according to industry sources.
The sources said NPS issued requests for proposals (RFP) for the two mandates recently.
One mandate of KRW400bn is for value-add strategy and the second of KRW200bn for core logistic strategy.
One of Korea’s largest asset managers confirmed that NPS plans to increase its exposure to real estate with the new mandates as part of an overall push to increase exposure to alternative assets.
“It is in a proposal stage and the RFPs are going to local asset managers who will submit their plans by next month,” Joseph Lee, head of funding and finance at IGIS Asset Management, told IPE Real Assets.
NPS had KRW622trn under management at the end of December 2017. It ranks among the top five national pension funds in the world.
It is widely known among Korean asset managers that NPS plans to lift its allocation to alternative assets, including real estate and infrastructure to 15% from around 10.8%.
As at December 31, 2017, around 50.6% of its investment was invested in fixed income. Domestic equities accounted for 38.6%.
According to the NPS website, at the end of December 2017, the fund held Korean alternative assets valued at KRW22.3trn, of which 29% was in real estate,
By comparison, it held KRW44.6trn in alternatives overseas, and 41.1% of this was in real estate.
In January last year, NPS issued an RFP for KRW280bn for core investment strategy.
The mandate went to IGIS, the country’s largest real estate fund manager with more than US$18bn (€14.6bn) of managed assets, and Samsung SRA Asset Management.
Lee told IPE Real Assets that IGIS has allocated 75% of the NPS mandate within a year.
“We closed US$1.1bn in transactions using the core mandate from NPS,” he said.