Pension authority to set up $830 million Asian fund

The National Pension Service on Friday said that it will select eight local asset managers to set up 900 billion won ($830 million) fund investing only in Asia.

The NPS, the world’s fourth largest pension fund, said that it will start taking bids on May 26 to run the Pan-Asia Fund which will invest in stocks, bonds and commodities of China, India and other Asian countries.

“We’re expanding our investment into Asia for the growing importance of the region. We have been working with local asset managers with rich experience in managing Asian portfolios so we’re confident about stable returns,” an official at the NPS said.

Each manager will handle up to 200 billion won under an 8-year contract and invest in venture companies seeking Asian expansion. The selection will be finalized by June 10 for the contracts to begin in October.

The NPS has been diversifying investment areas to manage its total asset of over 333 trillion won. In 2009, it bought HSBC’s headquarters in London for 1.5 trillion won and an office building in Sydney, Australia. The state fund in 2010 April struck a deal to take over Berlin’s Sony Center from a Morgan Stanley real estate fund for 850 billion won.

“A lot of local venture firms have invested in the Asian market and have a good understanding of the region, which is likely to lead to a high return,” said the NPS official.

It entrusted 440 billion won to Pramerica Real Estate Investors, an affiliate of Prudential Financial whose main business is investing in office buildings of China, Japan and Australia. Stocks owned by the NPS make up about 5 percent of the market capitalization in Korea.

The NPS also drew the media spotlight last month when a presidential secretary voiced the need for pension funds to actively use their shareholders’ rights as a way to check growing chaebol powers.

By Cynthia J. Kim (cynthiak@heraldcorp.com)