SOUTH KOREA/US - South Korea's National Pension Service said it has bought a stake in Colonial Pipeline Co, operator of the largest pipeline linking US Gulf Coast refiners and East Coast markets, to diversify its portfolio.
South Korea's biggest investor purchased the 23.44% stake from Chevron Corp. in partnership with Kohlberg Kravis Roberts & Co., the state fund said in an e-mailed statement today, without disclosing the transaction value.
"The investment is part of our efforts to diversify globally to ensure stable long-term returns, and it would be an important opportunity to expand investments in energy-related assets," according to the statement.
National Pension was picked as a preferred bidder to acquire the stake for about 1trn won ($890m), the Korea Economic Daily said on August 23, citing an unidentified official at the fund. Kim Ha Young, a spokesman at National Pension, declined today to comment on the value.
The fund supplied most of the capital for the purchase, said two people familiar with the deal, who asked not to be identified because the terms are confidential. KKR will manage the asset on behalf of the South Korean fund, the people said.
Peter Mckillop, a KKR spokesman based in New York, declined to comment on the purchase and management of the stake. National Pension is unable to comment further on the deal, the fund said in an e-mail.
"Investment in energy-related infrastructure seems sensible because it's less risky compared with direct investment in natural resources where there's fiercer competition amid the global race for resources," said Kim Hwa Nyeon, a Seoul-based research fellow at Samsung Economic Research Institute covering oil and other raw materials.
The state fund, which had 303 trillion won ($270bn in assets as of August, is investing in overseas stocks and real estate from Australia to the UK to diversify from domestic fixed-income holdings. National Pension plans to boost its overseas investments to at least 20% of assets by 2015 from about 12% now.
National Pension's overseas investments include a shopping mall near Paris, Berlin's Sony Center, London's Gatwick Airport, a office building in Sydney, and HSBC Holdings' London headquarters.
The fund is overseen by the Ministry of Health & Welfare and covers private-sector employees and the self-employed. It forecasts increasing assets to 488trn won by 2015.
Colonial Pipeline's 5,519-mile (8,880-kilometer) system moves gasoline and other fuels from refineries along the Gulf to markets including Washington and New York City.
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