S.Korea's NPS in $160 million Gatwick airport stake deal

SEOUL/AMSTERDAM (Reuters) - South Korea's National Pension Service said on Tuesday it planned to buy a 12 percent stake in London's Gatwick Airport for around 100 million pounds ($160 million) to increase investment in alternative assets.

The move highlights a trend among pension funds to invest directly in infrastructure assets in search of improved returns rather than use infrastructure funds, as they seek to match long-term investments with their long-term liabilities.

A formal signing of the deal between the world's fifth-largest pension fund and infrastructure fund Global Infrastructure Partners will be made next week, a NPS official said, confirming an earlier report in the Financial Times.

A spokesman for Global Infrastructure Partners declined to comment on the report.

The $5.64 billion infrastructure fund, sponsored by Credit Suisse (CSGN.VX) and General Electric (GE.N), bought London's second biggest airport last year from BAA, majority owned by Spain's Ferrovial FER1.MC, for 1.51 billion pounds.

With several aspects of public services in Britain privatized, pension funds have emerged as major investors in UK infrastructure, also eyeing assets in the water and power sectors.

Earlier this week, Ontario Teachers Pension Plan was reported as mulling a 1.7 billion pound bid for Northumbrian Water NWG.L, while both Canada Pension Plan and Borealis, an investment arm of the Ontario Municipal Employees Retirement System, have been looking at EDF's (EDF.PA) UK power grid sale.

SCARCE OPPORTUNITIES

Infrastructure investors looking for airport assets in Europe have few opportunities available to them, with major key airport privatizations such as those of Prague and Lisbon yet to come to fruition and few operators currently selling.

Ferrovial's Chairman Rafael del Pino told Reuters last week that the credit crisis has also forced many financial players out of the market, giving an edge to strategic players that compete for such assets.

NPS, with around 274 trillion won ($236.3 billion) in assets, aims to boost investments in assets such as real estate, infrastructure and private equity funds to 6.4 percent this year from 4.5 percent as of end-November, and has been building a global presence in the past year.

It bought global bank HSBC's (HSBA.L) landmark European headquarters in London's Canary Wharf for 772.5 million pounds in November in one of the world's biggest property transactions last year.

In January, the fund agreed to buy a prime office building in Sydney for 750 billion won.

(Additional Reporting by Susan Fenton; Editing by Jonathan Hopfner and Hans Peters)

($1=.6264 Pound)

($1=1159.4 Won)