Korean insurer DGB targets PE, debt in mammoth alts push

The $5.9bn institution has an 8.8% exposure to alternatives, most of which is held in infrastructure debt, CIO Byung-kyu Cheon tells PEI.

DGB Life Insurance, a Korean institution with 8 trillion won ($5.9 billion; €5.8 billion) of assets under management, will target private equity and private debt in a bid to nearly double its alternatives exposure.

The insurer will commit to its first secondaries fund next year, chief investment officer Byungkyu Cheon told Private Equity International on the sidelines of Tuesday’s PDI Seoul Forum, hosted by affiliate title Private Debt Investor. DGB has previously backed one private equity fund of funds.

The move comes amid plans to raise DGB’s alternatives exposure from 8.8 percent currently to 15 percent over the next three to four years, Cheon added, noting that infrastructure debt accounts for much of the existing portfolio.

South Korean institutions represent an increasingly lucrative pool of capital for private equity managers, with many looking to diversify their portfolios across new strategies and regions. Such LPs typically follow the example of investment giants such as the National Pension Service of Korea when building their portfolios.

The 948.7 trillion won pension’s private equity and debt commitments increased by more than 38 percent last year, according to its latest annual report. The institution had committed 84.6 trillion won to private equity and private debt by year’s-end.

Like DGB, NPS is ramping up its private debt and secondaries portfolios. Next year, the pension plans to form independent teams for both asset classes, which are currently managed by its alternative investment strategy department, PDI reported this week.

“That may be subject to further discussions, but at the moment, that is the plan,” Jeryang Lee, head of the strategic alternative investments team at NPS, told delegates at Tuesday’s event. “The reason why we wanted [private debt] to be an independent team on its own is so that we can grow the portfolio of PD assets. And given the economic situation… it’s making PD investments overall more attractive.”