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South Korean pension to invest in $7bn TPG fund

The head of Korea’s largest pension fund has told PEO it is close to committing $300 million to a TPG distressed investment fund as it seeks to increase private equity allocations.

South Korea’s National Pension Service is in the final stages of making a commitment to TPG Capital's planned $7 billion (€4.5 billion) fund for investing in troubled financial companies, mainly in North America and Europe.

This latest commitment comes at a time when the pension fund is looking to increase its allocation to private equity funds, the head of global investments for the pension Daeh-hwan Kwag, told PEO.

Kwag said that while the pension fund does not have a specific allocation to private equity, it is trying to increase its commitments to the asset class. The pension fund currently allocates between 2 to 3 percent of its assets to alternatives, a figure it is looking to increase to 10 percent over the next five years, he added.

The National Pension Service had overseas private equity capital commitments of about $1bn as of December 2007. It has invested in about 10 funds so far, and has made commitments with managers such as Blackstone, KKR and TPG. Kwag said it is now looking at investments in Asian funds although the pension fund's initial private equity investments were made in North America and Europe. This is in addition to the investments it has already made in South Korean private equity funds.

The pension fund manages approximately $233 billion as of December 2007.