South Korea’s KB Asset Management has agreed to invest $200 million into combined cycle power plants in the United States as part of efforts to diversify its offshore investment portfolio for stable returns.

According to sources in the investment bank (IB) industry, KB Asset Management has raised $200 million from domestic insurers, mutual aid associations and other institutional investors to partly finance a $760 million deal where an investment affiliate of Starwood Energy Group Global, LLC, a U.S. energy infrastructure investment firm, acquires power plants in Marcus Hook, Pennsylvania.

The $200 million loan in the form of senior debt with a maturity of eight years is expected to deliver a return of 4 to 5 percent a year. The transaction includes the 790-megawatt (MW) combined-cycle Marcus Hook Energy Center, where power plants are being operated at 90 percent of capacity.

Korean investors can rely on a stable investment return for many years as these facilities are mainly natural gas-fired power plants, the major sources of electricity in the U.S., an investment expert said.

The investment is also significant in terms of investment portfolio diversification, as investors can expect relatively stable and sustainable returns from energy and infrastructure investment in North America.

Korean institutional investors have been accelerating their efforts to increase investment in overseas energy and infrastructure sectors. KB Asset Management raised some 200 billion won ($179.5 million) from insurers and mutual aid associations in the first half of this year to set up a fund that invests in infrastructure projects involving power plants, roads, medical care and school facilities in North America. More recently, Korea’s Public Officials Benefit Association invested about 50 billion won in Macquarie Australian Infrastructure Fund dedicated to investment into key infrastructure projects like transportation, energy and electricity.

By Kang Doo-soon

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