Woori Asset Management has teamed up with Korean steelmaker Posco and US-based EIG Global Energy Partners to launch a private equity fund to invest in global natural resources.
Korea’s National Pension Service is also putting money into the fund as it seeks to diversify its allocation to international alternative investments.
According to Woori Financial Group filings with the US Securities & Exchange Commission, Woori Asset Management established Posco Woori EIG Global Fund earlier this year, with W560 billion ($500 million) of assets. The fund was set up as a limited partnership in which Woori AM serves as a general partner, having contributed 0.5% of the capital.
EIG, headquartered in Washington, DC, has invested in energy since 1982, with $11 billion deployed, according to its website. It invests across the industry, from upstream oil and gas, midstream and infrastructure, to power generation, renewables and resources.
In 2011, EIG spun off from Trust Company of the West, in which it had originated as TCW’s energy and infrastructure group. Earlier this year it sold a minority stake to China Investment Corporation; CIC has been an investor in EIG-managed funds and is believed to want to use this relationship to learn how to invest in energy and infrastructure assets.
People familiar with the Woori/Posco/EIG fund say resource-hungry Posco approached Korean financial institutions with its desire to secure energy supplies. The new fund will also invest in special projects for conglomerates and listed companies.
NPS intends to come in as a pure investor, looking to diversify its growing allocation to global private equity. An NPS spokesman says, “NPS has concluded corporate-partnership funds with some Korean companies”, including Posco, adding that NPS intends to invest but has not yet committed capital.
Woori AM will continue to seek third-party investors.
Korean financial institutions such as Woori, Kookmin Bank, Shinhan Financial Group, Mirae Asset and Samsung Financial Group are eager to move into alternative investments, using their far-flung financial empires to develop sources or partnerships.
Traditional asset management in the form of mutual funds is stagnant, while Korean institutional investors have a growing appetite for private equity, infrastructure, real estate and commodity exposures across the capital spectrum.
Woori Financial established Woori Private Equity Company in 2005 to strengthen its principal investment operations and leverage Woori’s corporate banking network. The new company established its first PE fund in 2006, with W344 billion. In 2009, it established Woori Blackstone Korea Opportunity Private Equity Fund I with W606 billion.
The EIG deal was put together directly by Woori Asset Management.