South Korea's National Pension Service (NPS), the world’s third-largest pension scheme, sees infrastructure as good prospect for returns in a low interest rate environment.

NPS will chase equity stakes in foreign companies running power, harbor and road projects, as it is seeking to ramp up exposure to offshore infrastructure and diversify investment channels.

The NPS, with KRW540.7 trillion (US$476.27 billion) in assets as of the end of July, will also diversify into non-traditional infrastructure such as airplanes and vessels. Earlier this year, it invested US$300 million in acquiring a stake in a liquefied natural gas carrier leased by BP.

As of end June, NPS committed KRW11.7 trillion ($10.3 billion) to infrastructure, of which KRW6.5 trillion has been executed.

Infrastructure projects have moderate risk and steady returns, as countries are stepping up investments in energy, transport and water projects as part of efforts to boost economic growth.

NPS had formed a joint fund last year with China Investment Corporation (CIC), Queensland Investment Corporation and other investors, targeting infrastructure that the Australian government plans to privatize. For the fund’s first investment, NPS had put AUD500 million into a deal of securing a 50-year lease on Australia’s biggest container and cargo port in Melbourne.

In August, we reported NPS would invest US$282 million in Macquarie European Infrastructure Fund 5 (MEIF5).