Private Equity News & Analysis

Korea Post allots $600m for overseas mid-market managers

The $112bn investor has issued a call for applications for overseas mid-market buyout managers.

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Korea Post, the national postal service of Korea, has issued a call for proposals for overseas private equity managers.

The investor will commit $200 million each to three managers focused on the mid-market, according to an announcement on its website. GPs with more than 50 percent allocation in Asia and emerging markets will be excluded.

Korea Post requires applicants to have managed buyout funds with more than 50 percent of its portfolio in control deals. GPs must also have a weighted average enterprise value of $2 billion or more from the previous fund. In addition, the target fund size must not be more than $4 billion. It should also be generating a preferred return of 7 percent IRR or a multiple of invested capital of at least 1.25x, and a maximum of 20 percent (after preferred return, with catch-up) performance fee, as per the selection criteria.

In terms of management fee, the requirement is a maximum 200 basis points of total committed capital. The GP commitment should be minimum 1 percent of the total committed capital of LP, while fund leverage, which should include a credit facility, needs to be less than 50 percent, Korea Post said in an announcement on its website.

The deadline for applications is on 6 June 2018, with the investor’s final selection to be announced between August and September.

Korea Post manages close to 120 trillion won ($112 billion; €90 billion) of assets, of which about 6.6 percent is invested in alternatives, according to PEI data. Its most recent capital commitments include $100 million each to Goldman Sachs Principal Investment Area and Park Square Capital. In March Korea Post said it was committing a total of $200 million in two separate mandates as part of its global co-investment strategy.

Korean institutional investors have in the last year made announcements to ramp up their investments in alternatives. Earlier this month, Korea Investment Corporation said it will increase its exposure to alternative assets by 5 percent over the course of two years, bringing its total exposure to 19 percent. In addition, the Public Officials Benefit Association, which has a target allocation of 22 percent to alternative investments, said it would put in an additional 700 billion won into private equity.