KB Asset Management, Balhae Infrastructure Subscription Open to General Investors on 18-19

KB Asset Management's flagship infrastructure fund, ‘KB Balhae Infrastructure Investment Company,’ will open a public offering subscription for general investors over two days, from the 18th to the 19th. The offering price is 8,400 KRW, with KB Securities as the lead underwriter and Kiwoom Securities and Daishin Securities as joint underwriters.

Balhae Infrastructure is the first domestic native public infrastructure fund, planning to complete its initial public offering (IPO) process and list by the end of this month.

The main investment targets are social overhead capital (SOC) such as toll roads, tunnels, and railroads. Currently, it invests in high-quality toll road assets used by approximately 108 million vehicles annually, including the Daegu-Busan Expressway, Namyangju Suseok-Hopyeong Road, Seoul Yongma Tunnel, Busan Sanseong Tunnel, and Suwon Northern Outer Ring Road, distributing operating profits as dividends.

The private investment projects that Balhae Infrastructure mainly invests in can generate stable long-term returns through agreements with the government, and their inflation-linked revenue structure allows profitability to be maintained even in high inflation situations.

Due to the government’s policy to strengthen incentives for public infrastructure funds, public infrastructure funds will be added as investment targets for personal pension savings accounts. Currently, transactions are possible through retirement pensions, individual retirement pensions (IRP), and individual savings accounts (ISA), and in the future, they will also be available through personal pension savings accounts.

When individual investors invest in infrastructure funds through dedicated accounts for investment collective investment schemes, they can receive a separate taxation benefit of 15.4% on dividend income up to a limit of 100 million KRW.

According to the securities registration statement, Balhae Infrastructure’s cumulative dividend yield since inception is 6.99% per annum, and the dividend yield for the next three years is expected to be around 7.74% per annum. Since the dividend payment recipients are confirmed based on the year-end settlement, public offering investors who hold shares until the end of this year can receive the same semi-annual dividends as existing shareholders.

Kim Hyung-yoon, Head of Alternative Investments at KB Asset Management, said, "We expect to pay approximately 325 KRW per share in semi-annual dividends if held until the end of the year after Balhae Infrastructure’s listing," adding, "Considering the recent unstable financial market conditions, we reduced the scale of new share issuance to minimize market burden, and accordingly, there is a high possibility that dividends will be further increased."

Kim also added, "Even if the base price falls after the ex-dividend date, the infrastructure fund’s characteristics allow the price to recover within a short period," and recommended, "We suggest investing in Balhae Infrastructure for investors seeking a stable investment destination for retirement funds and tax-saving effects."