Korea¡¯s NPS, Shinsegae to jointly invest $667 mn in Starfield Goyang

South Korea¡¯s biggest institutional investor National Pension Service (NPS) and retail conglomerate Shinsegae Group will invest almost 800 billion won ($667.2 million) together in Starfield Goyang, a mega shopping complex slated to open in the second half of next year in Samsong district in Goyang, Gyeonggi Province.

According to multiple sources from the investment bank industry on Thursday, NPS and Shinsegae Group have agreed to invest a combined 770 billion won in Starfield Goyang that is scheduled to open in August, next year. Shinsegae Group is expected to directly secure 390 billion won in funds while NPS 380 billion won indirectly by investing in a real estate private equity fund managed by Igis Asset Management Co.

According to sources, Igis Asset Management and Shinsegae Property Co. signed an investment deal on Wednesday. Under the agreement, Shinsegae Group and NPS will each own 51 percent and 49 percent shares in a special purpose company set up to build Starfield Goyang. NPS aims to raise annual dividend returns of 9 percent from its investment in Starfield Goyang. The deal will last for 10 years with open possibility of five-year extension.

It is the first time for the world¡¯s third largest pension fund NPS to chip in the first stage of facility development in partnership with a private equity fund. It has invested in an already-built retail facility so far.

Shinsegae Group is known to have put out efforts to secure long-term investment from NPS. In the case of Starfield Hanam, its first mega shopping theme park in Hanam, Gyeonggi, Shinsegae Group was required to recruit foreign investment so it partnered with United States real estate developer Taubman Asia. But Shinsegae Group was free from any preconditions so it had put NPS as its priority investor from the beginning.

Starfield Goyang is Shinsegae Group¡¯s second large-scale shopping theme park in addition to Starfield Hanam. The size of the retail facility is expected to be equal to the size of 50 football fields. The conglomerate aims to target consumers in the northwest region of Seoul that links Eunpyeong and Seodaemun districts in Seoul and Goyang in Gyeonggi.

The six-story shopping complex with two underground floors will rest on a total floor area of 364,400 square meters with site area totaling 100,000 square meters. The parking area will hold 4,500 vehicles.

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