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Korea sees first private roads fund
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Australia's Macquarie Bank and its South Korean joint venture partner, Shinhan Financial Group, have set up Korea's first private infrastructure fund. In a statement to the Australian Stock Exchange on Monday, Macquarie said the venture's Korean Road Infrastructure Fund (KRIF) had raised 247 billion won ($207 million) from Korean institutional investors. It plans to raise another 103 billion won ($86 million) by the middle of this year. Shinhan is likely to become Korea's second-largest banking group later this year, if it succeeds in taking control of fourth-ranked Chohung Bank. Late last month Shinhan won preferred bidder status for the government's 80 percent stake in Chohung Bank, the country's oldest bank. That stake is worth about $2.5 billion. Pension fundsMacquarie and Shinhan have committed 30 billion won and 45 billion won to the KRIF, with the balance coming from Korean pension funds and insurance companies such as Dongbu Life and Kyobo Life. Macquarie said the money would be invested predominantly in Korean toll roads and tunnels. It already has an interest in the Soojongsan tunnel, in the southern port city of Busan. The deal continues Macquarie's aggressive push for infrastructure opportunities around the world. It already manages $3.36 billion in 10 funds. In addition to toll roads and airports in Australia, these funds have invested in the Midlands Expressway in the U.K., Highway 407 in Canada, Aeroporti di Roma in Italy, and other assets in Germany, Spain, Chile, Portugal and South Africa. Macquarie, which has management control of the venture, said KRIF had won exclusive or preferred positions to invest in six toll road assets in Seoul and other major cities in Korea. Float in futureOf these six, three were already operating and three were under construction. It said all the assets had concession rights of 20 years or more. Macquarie Bank executive Mark Ramsey, who chairs the Macquarie Shinhan Inrastructure Management Co. Ltd., said he hoped the KRIF would be floated in the future, giving Korean retail investors the chance to take part in what he said was a "stable asset class". "Infrastructure investment represents stable and long term growth for Korean investors," Ramsey said. "Over the next 10 years it is estimated that 55 percent (109 trillion won) of Korea's infrastructure expenditure will be privately financed. As a result we anticipate huge interest in the fund." South Korea is Asia's fourth-largest economy behind Japan, China and India. It is also the world's fastest growing industrialized economy, with a growth rate of 6.0 to 7.0 percent for 2003. Shares in Macquarie Bank are 2.64 percent higher at A$24.84 in Sydney Monday afternoon, against a gain of 0.51 percent for the benchmark S&P/ASX200. In Seoul, Shinhan Financial Group is unchanged at 12,950 won. The broader market, measured by the Kospi, is down 0.2 percent to 659.76.
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