S.Korea fund to buy stake in British airport

SEOUL: South Korea's state pension fund, the world's fifth largest, said Tuesday it would buy a 12 percent stake in Britain's Gatwick airport -- its second major investment in the country in three months.

"We have been looking into investment opportunities abroad which ensure safe returns," said Kim Hyung-Dong, spokesman for the National Pension Service which has assets of more than 273 trillion won (236 billion dollars).

"The investments in Britain are part of efforts to diversify investment," he told AFP.

The pension fund, said in a statement it has signed an agreement with Global Infrastructure Partners, which bought Britain's second busiest airport last October for 1.51 billion pounds (2.4 billion dollars).

The cost of the 12 percent stake would be about 180 billion won (155 million dollars), it said.

The fund said it expects Gatwick's business to increase before the 2012 London Olympics "and its long-term cash flow is expected to stabilise through efficient management".

The fund will expand investments in overseas infrastructure, it said. Foreign investment currently makes up just under 10 percent of total assets.

Last November banking giant HSBC announced it is selling its London headquarters to the National Pension Service for 772.5 million pounds.

The fund's managers have been under pressure to diversify investment to secure higher returns amid concern about South Korea's ageing society.

A government report in October 2007 estimated that the fund would dry up in 2060 due to rising pension payments.

But managers have been focusing on safe investment opportunities overseas because of the global financial downturn.