Korean Teachers’ Credit Union plans to invest $100 million in a fund that will be set up by Macquarie Group Ltd. and China Everbright Ltd. to buy infrastructure assets in China.
Macquarie, Australia’s largest investment bank, and China Everbright, a Chinese brokerage, will manage the fund that will focus on so-called brown field assets, or existing projects, according to Korean Teachers’ Credit, a welfare agency for the nation’s teachers and other school employees. The fund will be set up in the first quarter and will seek other investors, it said, without providing details.
“Demand for infrastructure facilities in China will surge as the economy grows quickly and urbanization progresses, giving us enough reasons to expect stable returns,” the union, which manages 17.8 trillion won ($15.9 billion) in assets, said in an e-mailed response to queries. “The investment may also help us secure good opportunities going forward once the Chinese government sells stakes in existing infrastructure assets.”
China’s economy probably expanded about 10 percent in 2010, the National Bureau of Statistics said this month. Spending on railways, power plants, highways and other large-scale infrastructure projects is accelerating as people flock to cities from rural areas. The nation will have an urban population of about 1 billion people by 2025, and may spend 11.1 trillion yuan ($1.7 trillion) over the next 10 years on electricity plants alone, according to McKinsey Global Institute and China Electricity Council forecasts.
The 40-year-old credit union is also setting up the fund to diversify, with overseas investments accounting for less than 2 percent of assets as of November. The agency, which has 610,000 members, was among investors that bought a San Francisco office tower occupied by Wells Fargo & Co. in June for $333 million in the city’s biggest commercial property deal in three years.
Global investors’ allocation to infrastructure investments will increase more than fourfold by 2012, according to a Russell Investments Ltd. survey released in June. It made up 0.3 percent of portfolios, the survey showed.
Japan’s public pension fund, the world’s largest with about 120 trillion yen ($1.5 trillion) in reserves, is considering infrastructure investments to diversify, the fund said in August. The Canada Pension Plan Investment Board, the nation’s second-biggest pension manager, also said in the same month it will buy Sydney-based Intoll Group for A$3.44 billion ($3.42 billion) to gain stakes in toll roads in Toronto and Sydney.