News Hub: From data centres to sovereign debt, Asia's investors widen their search for yield

Institutional investors across Asia Pacific (Apac) are recalibrating their strategies as artificial intelligence (AI) accelerates infrastructure demand, pension systems mature and regulators compete to attract global capital.

This week, major investors pursued data centre opportunities, pension funds expanded into new markets and policymakers unveiled fresh frameworks aimed at deepening investment activity.

KOREA CAPITAL MOBILISATION

South Korea is deploying a dual-track capital strategy that spans institutional offshore expansion and domestic retail engagement.

The National Pension Service (NPS) is seeking a licence to invest in Indian government securities under a new compliance-light route offered by India's market regulator, according to a report by Reuters. The move will allow the fund to capture India's benchmark 10-year sovereign bond yields of roughly 7%, establishing a channel for sovereign debt beyond its equity-heavy offshore Indian funds.

Meanwhile, the Korean government is planning to launch its second public participation growth fund seeking KRW600 billion ($440 million) from retail investors starting September 30. Half of the five-year, closed-end fund will initially be reserved for lower-income investors, with government and asset manager seed capital absorbing up to 23.3% of losses at the sub-fund level.

DATA CENTRES AND AI INFRASTRUCTURE

From buyout consortia to project loans by life insurers, cross-border capital is moving to back data centre assets and lock in attractive yields across the region and beyond.

A consortium backed by BlackRock and IFM Investors has entered exclusive talks to acquire Stack Infrastructure’s Apac data centres, according to Bloomberg. The deal, involving the BlackRock-backed Artificial Intelligence Infrastructure Partnership, could value the portfolio across Tokyo, Osaka, Melbourne, Sydney and Johor Bahru between $20 billion and $25 billion.

Japanese insurer Nippon Life plans to deploy JPY2 trillion ($12.7 billion) in infrastructure financing by 2035, primarily targeting US data centres, according to Nikkei. The insurer seeks spreads averaging over 2% through project finance, helping operators offset the surging costs of semiconductors and hardware.

PENSION EXPANSION AND FUND PERFORMANCE

Asian pension managers are broadening their management arms and navigating market volatility, though alternative asset exposures are placing private credit risk management under the spotlight.

In India, state-owned Bank of Baroda is entering the retirement space by establishing BOB Pension Fund Management, acquiring an 80.1% majority stake for INR800.1 million ($9 million). The move increases the number of asset managers available to National Pension System members to 11, introducing new competition into a sector where SBI, LIC and UTI Pension Funds currently control roughly 85% of the market.

In Japan, group pension portfolios showed signs of recovery, with five out of nine major life insurers delivering positive market value returns for the 2025 financial year. Taiju Life Insurance led performance with a 5.73% return, while Nippon Life Insurance—which holds the largest group pension asset base at JPY14.2 trillion ($90 billion)—posted a 3.03% gain.

Meanwhile, growing pension allocation to private credit is facing a test case in Australia. Australian Retirement Trust holds around A$20 million ($14 million) in exposure to insolvent Sydney developer Bathla Group via a PAG-managed private credit fund, according to Bloomberg. While representing just 0.005% of its assets, the default comes as regulators step up surveillance of private credit complexity.

REGULATORY REFORMS 

Regulators across Apac are moving to enhance market transparency while introducing jurisdictions to capture cross-border private wealth.

Australia is moving to tighten oversight of its sprawling A$3 trillion managed investment scheme sector. The government has launched consultations on new disclosure requirements to close critical data gaps, particularly across unregistered wholesale schemes, according to Bloomberg. The initiative aims to improve visibility for regulators and track capital flows between managed schemes and Australia's A$4.8 trillion superannuation system.

Meanwhile, Bhutan’s Gelephu Mindfulness City (GMC) is opening a new frontier for wealth management. On October 1, GMC will launch a low-friction regulatory framework allowing family offices, investment funds and asset managers to set up operations. Entities managing at least $10 million in assets will receive automatic tax benefits without needing complex formal licensing applications, a regime specifically designed to cater to Indian fund managers.