The Public Officials Benefit Association (POBA) of South Korea has announced its aim to commit AUD60 million (US$45.7 million) to a Macquarie infrastructure fund that will invest in Australian state assets.

The new Macquarie fund comes as Australia is looking to privatize part of state asset to cover a budget deficit. 

With this commitment, the Macquarie infrastructure fund raises up to AUD1.5 billion (US$1.14 billion) to acquire infrastructure assets from the Australian government in private deals.

The savings fund for local public officials is expecting a more than 8% annual return on the investment in the new Macquarie fund that is also drawing interest from a few other South Korean institutional investors.

Moreover, according to sources, POBA is also considering investing into an infrastructure fund in the United States and Europe, respectively. The commitment to these infrastructure funds would be about US$$44 million for each, similar to the amount it had put into the US$14 billion infrastructure fund raised by Canada-based Brookfield in the first half of this year. The Brookfield fund had attracted a total of US$700 million from major South Korean institutional investors.

POBA’s Chief Investment Officer Dong-hun Jang said last May:

"The association needs to make a new commitment of at least KRW480 billion (US$429 million) to alternative investments this year. The share of alternative assets may exceed half of its total AUM by the end of this year."