NPS Investment Healthy

National Pension Service comes out ahead in its fund operations thanks to rebound in share prices and fall in interest rates

President & CEO Park Hae-choon of the National Pension Service (NPS) said on Jan. 15 that NPS fund operation showed a small profit for 2008, contrary to reports that it lost money.
The CEO said NPS has not suffered losses in the operation of its funds, contrary to reports that it would end the year recording a deficit in its fund operations including investments in stocks and other areas.
The turnaround was owed to the fall in interest rates, rising bond yields and a recovery in share prices toward the end of last year, he said, adding that NPS has done a good job managing its investments when most pension funds in other countries suffered losses ranging from 8 to 20 percent amid the economic crisis sweeping the world.
NPS, now ranked fifth in the world in terms of assets, follows closely on the heels of CALPERS, the California state employees pension fund, which lost 22 percent of its investment in 2008. NPS' assets totaled some $180 billion at the end of 2008, very close to catching up to CALPERS' asset total.
Park said NPS set a 12 percent limit for investment in the stock market and will not increase the limit this year.
In the meantime, the National Pension Service signed a memorandum of understanding with Blackstone Group to make joint investments in Korea worth $2 billion. The signing took place at the NPS headquarters in Seoul with Park and Blackstone Group Asia-Pacific Representative Ben Jenkins signing the agreement for their respective companies.
Under the agreement, NPS will get $2 billion from Blackstone as funds to be jointly invested with NPS funds in Korea.
The U.S. private equity fund plans to make investments primarily in such areas as corporations, infrastructure and real estate, but will also look at securities and a variety of domestic bonds issued in Korea.
Under the MOU, the NPS will be able to use Blackstone's overseas network to find investment projects abroad, NPS officials said.
Blackstone Group Chairman Steve Schwarzman said the MOU is part of Blackstone's huge interest in Korea with a number of superb global enterprises and companies with highly-developed technologies based on a well-developed financial market.
The chairman said he was very happy that Blackstone was able to have a strategic partnership tie-up with NPS, which is very important to not only Korea, but also to Blackstone's business operations around the world.
Based in New York, Blackstone Group is a worldwide professional alternative asset management company. Investors in the group consist of equity funds and national wealth funds, many of them in foreign countries.
NPS expects Blackstone to help diversify and boost its investments and continue to turn a profit.
Blackstone, founded in 1985, is a leading global alternative asset manager and provider of financial advisory services listed on the New York Stock Exchange (ticker symbol BX) with total assets under management of $119.4 billion as of June 30, 2008. The company seeks to create positive economic impact and long-term value for its investors, the companies in which the group invests, the companies it advises and the broader global economy. The company does this through the commitment of its extraordinary people and flexible capital.
Its alternative asset management businesses include the management of:
Corporate Private Equity funds of : Real Estate funds; Marketable Alternative Asset Management funds including: Funds of Hedge funds Debt Funds Proprietary Hedge funds Collateralized Loan Obligation Vehicles (CLOs) Closed-End Mutual funds
The company also provides various financial advisory services including: Corporate and Mergers and Acquisitions Advisory Restructuring and Reorganization Advisory Fund Placement Advisory
As of June 30, 2008, the group had 89 senior managing directors and employed over 750 other investment and advisory professionals at its headquarters in New York and offices in Atlanta, Beijing, Boston, Chicago, Dallas, Hong Kong, Houston, London, Los Angeles, Menlo Park, Mumbai, Paris, San Francisco and Tokyo.
In the meantime, NPS signed a memorandum of understanding with Oaktree Capital Management on Oct. 7 for the joint investment of up to $3 billion in Korea. NPS followed it up with another memorandum of understanding with MBK Partners providing for attracting foreign investment of up to $2 billion, NPS officials said.
Chairman Kim Byung-joo of MBK Partners and President Park of NPS signed the instrument, which brings the amount of foreign funds attracted by NPS to $5 billion. The move is considered quite a feat as it came when domestic banks have been having trouble attracting investments. nw

President & CEO Park Hae-choon of National Pension Service