[RFP] Korea’s GEPS seeks $160 mn offshore private debt fund managers

Feb 21, 2017 (Gmt+09:00)

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South Korea’s Government Employees Pension Service (GEPS) will select two global private debt fund managers employing opportunistic strategies to invest up to $160 million in a range of debts and fixed-income securities, according to the pension fund.

GEPS will commit between $50 million and $80 million each to the management firms receiving its mandate for the investment period of less than five years.

Qualified fund houses must have been in the business for a minimum two years, with the total amount of funds managed through opportunistic strategies in excess of $300 million.

The pension fund will receive proposals by Feb. 27 and finalize its selection on March 24.

GEPS has been allocating capital to private debt fund managers since 2015. It had committed €30 million each to Ares Management L.P. and Alcentra Capital Corporation in 2015, as well as $50 million to Crescent Capital Group and HPS Investment Partners in 2016, respectively.

Private debt funds are becoming a mainstream asset class among South Korean institutional investors in search of low-risk and stable returns. With a short payback period and swift investment execution, private debt funds are viewed as a good hedge against rising interest rates.

South Korea’s Public Officials Benefit Association (POBA) are finalizing its selection of five offshore private debt fund managers to allocate a total of $120 million in the first half of this year. The retirement fund for government employees is also expected to commit over $100 million to private debt funds in the second half of this year.

The Construction Workers Mutual Aid Association in South Korea has also kicked off the selection process of global private debt fund managers this month to invest about 80 billion won ($70 million) in the US and Europe, Yonhap Infomax reported on Feb. 21.

The Military Mutual Aid Association is also considering investing in offshore private debt funds, although the size of its investment amount has not been determined, according to the report.

Separately, a group of South Korean institutional investors are considering investing in a $2.5 billion private debt fund of Ares Management, an insurance source said last month.

By Donghun Lee

Leedh@hankyung.com