South Korean institutional investors including mutual aid associations and insurers have decided to invest total 200 billion won ($178.8 million) in an infrastructure fund managed by global investor Macquarie Group that targets social overhead projects in North America.

According to multiple sources from the investment bank industry on Sunday, local mutual aid associations and insurers including Korea Teachers’ Credit Union, Public Official Benefit Association, ING Life Insurance Korea Ltd., and Meritz Fire & Marine Insurance Co. will each invest in between 50 billion won and 70 billion won to join the about 4 trillion won infrastructure fund of Macquarie Group that aims to raise an annual rate of return of lower 10 percent. They will invest in the fund indirectly through a local fund managed by Truston Asset Management Co.

The Macquarie’s fund is designed to invest in high-grade infrastructure assets across North America in sectors such as transportation, energy, harbor, airport, and telecommunications. Local institutional investors’ decision to invest the fund comes after the infrastructure market in North America has grown to exceed 800 trillion won in the past five years, offering more investment opportunities to investors. U.S. President Donald Trump has also vowed to spend around 1,200 trillion won on the country’s infrastructure development over the next 10 years to revitalize the economy and create jobs.

An unnamed official from an institutional investor taking part in the fund said that as the United States and Canada are expected to see population in their major cities keep growing until 2040, demand for infrastructure development should continue to rise. To their central and regional governments that are short of capital, foreign private investment is a must to implement social overhead projects, the official added.

Macquarie has so far invested a total of 9.5 trillion won in 28 assets through four infrastructure funds across the world. Of them, it has earned an internal rate of return of over 13 percent from 10 assets.

By Kang Doo-soon

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