Korea Post eyes riskier assets abroad

SEOUL: South Korea’s state postal service is planning to buy riskier debt in North America and Europe as well as seeking foreign infrastructure assets and properties as it looks abroad for better returns.

Korea Post plans to increase investment in mezzanine and distressed debt by selecting highperforming asset managers, said president Kang Seong-ju here.

The US$112 billion (RM448 billion) fund is adding infrastructure and real-estate assets abroad and putting more money in hedge funds while reducing investment in stocks, said Kang.

“We didn’t have to look at such debt last year because stock markets were good,” said Kang, referring to relatively riskier debt.

Korea Post, which manages savings deposits and sells insurance at its mail offices, joins other conservative institutional investors in Asia increasingly wading into riskier alternative assets as they grapple with low interest rates and lacklustre equity returns.

While Korea Post’s allocation to those assets is still small, the move means it must manage risks posed by lower liquidity and less publicly available information on such investments.

Korea Post has put US$760 million in mezzanine and distressed debt, said Kang.

The fund has invested US$600 million in United States collateralised loan obligations though it doesn’t put money in equity tranches due to the higher risk.

CLOs pool high-yield, high-risk loans and slice them into securities of varying risk and return.

Kang said he had met Macquarie Group in Australia to boost infrastructure investments.

For overseas real estate, the fund was looking to diversify its assets into logistics facilities in the US and Europe.