Infrastructure Investor Network Seoul Forum: four takeaways

The Infrastructure Investor Network gathered once again in Seoul earlier this month, as Korean capital continues to show a strong commitment to the asset class.

Amid geopolitical tension and economic volatility, network members heard about how infrastructure continues to perform well during troubled times, with the rapid growth of digital infrastructure and data centre investment proving a particularly common thematic that was mentioned in most sessions.

Here are the key takeaways for those not able to be there in person:

Infra-real estate crossover

Our keynote LP interview was with John Chang, a managing director at Canadian pension giant CPP Investments. Chang discussed the investor’s exposure to data centres in Korea and how it has built its portfolio – and he brought a unique perspective, given that his background is in real estate investing and he primarily sits with CPP Investments’ real estate team, he said.

“Data centres have been positioned in a space where it can be covered by both infrastructure and real estate – and even private equity. And there has been a huge push towards collaboration between parties and teams,” he said, with CPP of course on the front line of this with its cross-asset-class investment in APAC data centre platform AirTrunk, in 2024.

“There are some assets that are still strictly divided – like say, an office building or retail, but those walls are beginning to come down. There are infrastructure teams looking at social housing, living infrastructure, even things like life sciences.” He added that real estate investors have tended to focus on asset-level investments, with more platform investments seen in infrastructure – and combining those mindsets within CPP has added value.

Korean LPs

Our final session of the day was our always-anticipated Korean LP panel, which featured representatives from the National Agricultural Cooperative Federation, Korea Investment & Securities, and Shinhan Asset Management.

David Lee of Korea Investment & Securities, speaking through a translator, said that his firm was now expanding its infrastructure portfolio, partly due to its favourable track record in recent years versus other asset classes like real estate. He said most of its assets were inflation-liked, such that the recent higher-interest-rate and higher-inflation environment has seen their enterprise values increase, producing “quite outstanding returns”.

He added that KIS is also looking to expand its infrastructure fund commitments, too, having focused primarily on direct asset-level investments to date.

Open or closed end?

Ryan Ha of the National Agricultural Cooperative Federation discussed his fund’s investments in five open-end infrastructure, two of which have been redeemed to date.

The fund does not have a streamlined process for re-upping to closed-end funds, he said, meaning that it must start from scratch when justifying an investment in a successor fund – a problem that goes away with just committing capital to an open-end vehicle.

This led to the investor committing more to open-end funds to begin with, he said, but this is no longer the favoured route for a few reasons. The primary reason for this? A concern over liquidity, specifically how long it had taken to receive capital back from certain funds after making a redemption request. Given the timing involved, it has led the investor back to looking at the re-up process again.

US positivity?

An afternoon session focused on the mid-market covered a lot of ground, including the impact of US policy changes and perceptions of the American market following Donald Trump’s return to office in 2024 – an important topic given South Korea’s historically close ties to the US. And while the panellists acknowledged that there is uncertainty and volatility, they also argued that the thematics underpinning infrastructure investment in the US remain broadly unchanged.

Melannie Pyzik, managing director, institutional client group, APAC for CIM Group, pointed out that allocations to the US are still happening, “irrespective of the asset class”, arguing it is “too large a market to ignore”.

She went on: “[Most people] in the US are saying: ‘This is noise. Ignore the noise – price it in, but it doesn’t matter. This is the thematic we’re buying. The needs in the US are the same [as elsewhere], with an ageing population, the public sector being poor, the private sector having the finance.

“In Australia, there is nervousness about what’s happening in the US. But they’ve all got on planes and spent time in the US checking out their current asset, meeting with their managers. And they come back and they want to invest in the US.

“So I encourage you to get to the US and come up with your own opinion.”