S.Korea NPS to pump $173 mln into Superior Essex buy

SEOUL, June 13 (Reuters) - South Korea's National Pension Service (NPS), the world's fifth-largest pension fund, will pump $173 million into a deal in which LS Cable Ltd (006260.KS) has agreed to buy wire and cable maker Superior Essex Inc SPSX.O.

The fund, managing $220 billion in assets, said on Friday that the investment would represent about a fifth of the roughly $900 million purchase price for the Nasdaq-listed company, with LS Cable taking up the remainder. "This is the first time for the National Pension Service to invest in a foreign company acquisition," it said in a statement. "We will buy preferred stocks in a special purpose company to be created for the deal, with put options and rights to convert into common stock."

The NPS has been trying to diversify into higher-yielding stocks, resources and acquisitions. It expects to be the world's second-largest pension fund by 2012 with assets of 415 trillion won.

Currently, the fund has put a meagre 3 percent of total assets, or 7 trillion won, into alternative investments such as private equity, infrastructure and property deals.

LS Cable, spun off from South Korea's LG Group in 2003, expects the deal to cost a total of $919 million and is seeking to raise $750 million to finance the acquisition.

U.S.-based Superior Essex is the largest wire and cable manufacturer in North America. Its core products include magnetic wire, used in transformers for industrial motors and generators.

Once the acquisition is completed, the combined entity will be the third-largest wire and cable manufacturing company in the world. The acquisition will also help LS Cable, which specialises in power and communication cables, boost its U.S. market presence and beef up product offerings. ($1=1033.5 Won)

(Reporting by Kim Yeon-hee; Editing by Ken Wills)