APG and NPS join forces in heavyweight $1.2tr tie-up

The largest retirement funds in the Netherlands and South Korea have formed a landmark partnership to focus on real asset mega-deals. Their investment heads tell AsianInvestor why.
APG and NPS join forces in heavyweight $1.2tr tie-up

Two of the world’s biggest retirement funds – APG Asset Management of the Netherlands and Korea’s National Pension Service (NPS) – have struck a landmark partnership under which they will jointly invest globally in large infrastructure and real estate projects.

It marks the first agreement of this type that APG, with €516 billion ($597 billion) under management, has struck globally with another asset owner. Similarly, the $650 billion NPS has never before formed such a tie-up with an international pension fund.

The alliance between the two leading asset owners underlines the rising importance of scale in today’s increasingly competitive investment environment. It also reflects growing appetite among larger investors, notably sovereign-linked funds, for direct deal-making in private markets and international collaboration with their peers.

AsianInvestor garnered more detail of the plans for the partnership during a video call to Ahn Hyo-Joon, chief investment officer of NPS, and Ronald Wuijster, the member of the executive board of APG Group responsible for asset management and chairman of APG Asset Management.

Ahn Hyo-Joon, NPS

They said the two funds had initiated the tie-up to improve their access to big real asset transactions, increase their bargaining power, reduce investing costs and, ultimately, improve investment returns.

The agreement also made sense because both institutions want to raise their allocations to real assets, and the infrastructure sector in particular is a place where large transactions are done. 

“We’re specifically looking for mega deals, typically $1 billion or bigger [under the partnership],” Wuijster said. Even an investor of APG’s size can only rarely take on such projects by itself, he noted. “So, if you want to have a diversified portfolio of mega deals, then it is useful to work with a like-minded partner.”

Moreover, investing in larger deals can provide better return possibilities because there tends to be less competition for those than slightly smaller transactions, said Wuijster.

APG and NPS also feel that working together will give them greater bargaining power to obtain better pricing terms and stronger governance rights, he added. “If we combine our forces, we will be better able to ensure certain conditions are included in a contract.”


Other potential advantages will come from cost- and knowledge-sharing. “We can benefit from each other’s expertise, as we will have two specialised, knowledgeable teams working on the deals,” said Wuijster.

And there are economies of scale to be gained. “For example, if you want to put together a contract, and you need to do it only once, you pay half the price if you share the cost. There are many elements like that," the Dutch executive noted.

Ronald Wuijster, APG

NPS’s Ahn said the tie-up would allow it to diversify deal-sourcing channels, in addition to the aforementioned benefits. These include the Korean fund gaining greater access to “global investment opportunities in quality real estate” and strengthening its capabilities through sharing experience and knowledge.

Alliances like this are helpful given the increasingly tough environment for investors, Ahn added. Interest rates across much of the world were already ultra-low even before the Covid-19 pandemic took hold in February, and the economic impact of the fight to limit its spread could mean they remain at rock-bottom levels for years to come.

Slowing global economic growth, heightened geopolitical tensions and rising protectionism in some quarters are also adding to the obstacles for global investors, as others have pointed out.

“Competition is getting fiercer and fiercer” for assets with decent yields, said Ahn. “By communicating and working together with global pensions such as APG, we can access more investment opportunities.”

Doing so is a particularly pressing task for NPS. Its investable assets are growing very fast as workers put money aside for their retirement, and are set to hit $900 billion by 2024, Ahn said.


APG and NPS may only now be inking a formal partnership, but the two organisations are already familiar and comfortable with how the other operates.

“NPS and APG have been talking since around 2008, and have spoken more actively since 2018,” Ahn said. “We closed two investments together this year, and this [new] agreement will strengthen our relationship for future investment.”

It emerged last month that NPS had allocated A$300 million ($208 million) to a fund managed by Australian student housing operator Scape Australia, in which APG became a foundation investor late last year alongside Allianz Real Estate and Axa Investment Managers.

And in April APG, NPS and Swiss Life Asset Managers announced they had agreed to buy 81.1% interest in Brisa, a Portuguese toll road operator valued at more than €3 billion.

Ahn and Wuijster stressed that the partnership was based on trust and understanding between their organisations. “We want to utilise each other’s strengths and cooperate as reliable, trusted partners,” Ahn said.

They also agreed that the two institutional investors’ strong alignment of interest was helpful in this regard. 

“We have very similar investment philosophies and similar sizes of AUM, and most importantly we trust each other,” Ahn said. “And we are both working for national retirement funds, so we have a common goal, and we can work together for mutual benefit.”

Both are also global investors with sizable overseas presences – APG in China, Hong Kong and New York, as well as in Europe, and NPS in London, New York and Singapore. 

Wuijster agreed that it was easier to invest alongside like-minded institutions. “It comes down to the asset owner mentality, long-term sustainable investing and shared interests.”

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