Korea’s NPS seeks alternatives managers for $1.9bn domestic mandates

The world’s third-largest public pension fund will also accept foreign GPs’ proposals if they have a presence in Korea.

The National Pension Service of Korea, the world’s third-largest pension fund in assets under management, has issued three requests for proposals across private equity, infrastructure and real estate investments.

The prospective mandate size is worth up to $1.9 billion across the asset classes. The pension fund is searching for GPs with funds investing in domestic alternative assets.

NPS is seeking up to two GPs which have funds investing in non-performing loans  for mandates worth 200 billion won ($177.6 million; €153.6 million) apiece. It also plans to offer up to two GPs 400 billion Korean won mandates per manager in large-cap private equity and up to two venture capital managers with mandates of 60 billion won apiece.

For infrastructure investments, NPS is seeking GPs with funds investing in renewable energy. The RFP specifies that once these mandates are awarded, they can invest in offshore assets worth up to 30 percent of the pension fund’s prospective commitment size. NPS plans award two mandates of 150 billion won each.

For its real estate investments, the pension fund is looking for core and core-plus strategies. It plans commit capital to up to two GPs which can either manage REIT vehicles or domestic real estate funds worth over 50 billion won. This domestic RFP excludes funds investing in project financing, real estate debt, and offshore real estate assets.

Although the RFP is for domestic mandates, NPS will accept applications from offshore GPs if they have a presence in Korea. Deadline for submission of proposals is at 3pm on 20 September.

Thirty-five foreign investment firms have a presence in Korea either through asset management or investment advisory businesses as of end-March 2018, according to a public disclosure on 19 June by the Financial Supervisory Service, the financial industry regulatory body in Korea.

The list included CBRE Global Investors, Lasalle Asset Management, and Macquarie Asset Management, among others.

For offshore alternatives, NPS tends to seek investment advisory services from a pool of consulting firms per alternative investment strategy, a spokesperson from the pension fund confirmed told sister publication Private Debt Investor.

PDI understands that NPS’ advisory pool New-York based consulting firm Mercer and Boston-headquarteredCambridge Associates.

NPS’ assets under management in global alternative investments increased by 503 billion won year-to-date as of end-May, according to its latest monthly disclosure posted on 27 July.

The pension fund plans to allocate 92.6 trillion won to global alternative investments by end-2019, according to a public disclosure from the Ministry of Health and Welfare of Korea in May.

NPS has a 3.3 percent allocation to private equity, 3.9 percent to real estate and 3 percent to infrastructure, according to PEI data. It has committed capital to Blackstone, Highland Capital Management, VIG Partners and BC Partners.

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