NPS replaces global alternative head in internal moves of senior managers

The National Pension Service (NPS) appointed its domestic alternative division head, Sang-Hyun Yoo, as the new head of the global alternative division on July 11, in internal moves that involved four of eight investment division heads at the fund.

The reshuffle came after three senior investment officials of the NPS – investment strategy head, post-investment management head and securities risk management leader - quit last month, ahead of the NPS’ fund management office relocation to a provincial city and amid rumors of a conflict between the three officials and its Chief Investment Officer Myoun-Wook Kang.

The internal moves are also seen as underscoring Kang’s focus on the stability of the fund’s management, rather than bringing in a big change.

In the personnel reshuffle, Yoo’s predecessor or the ex-head of global alternative, Young-Sig Yang, will move to the position of investment strategy head who takes charge of strategic asset allocation and environmental, social and corporate governance. His position is the most senior one among the eight investment division heads at the NPS.

As the new head of the global alternative division, Yoo will manage overseas alternative investments of the world’s No. 3 pension fund, including real asset, infrastructure, private equity, and hedge funds. As of the end of March, the NPS had committed about 6.5% of its total 526.5 trillion won ($460 billion) in assets, or 33.9 trillion won, to overseas alternative assets: 48.4% of the overseas alternatives were invested in real estate.

The moves also come as the NPS is diversifying into a variety of asset classes such as infrastructure, real assets and private equity funds. It posted double-digit returns on alternative investments in both 2014 and 2015, making up for sliding returns on stocks and bonds and helping the fund beat other major pension funds in last year’s performance.

NPS picked two general partners of fund of funds to make its first investment in hedge funds. In addition, it will commit $440 million to a $5 billion core fund that private equity firm Blackstone Group LP has been raising.

Yoo, 49, graduated from Seoul National University’s department of international economics, and worked at Morgan Stanley Property in charge of Korean property investments. Since joining the NPS in 2007, he has built experience in onshore and offshore alternative investments by heading the overseas private equity investment team, the domestic corporate investment team and the domestic alternative division.

Yang, regarded as the NPS’ two alternative investment gurus together with Yoo, joined the pension fund in 2005 and served as domestic alternative team leader and global alternative investment head. Prior to that, he had worked for the former Long-Term Credit Bank and the ex-Korea Technology Investment Corp., a venture capital firm. Yang, 50, had led the financing of the joint acquisition of leading golf brand, Titleist (company name: Acushunet), by Mirae Asset Private Equity and Fila in 2011. The former NPS CIO Wan-sun Hong had praised Yang, saying: “He has excellent investment sense and great ability of mediating complex and various interests.”

To the position of domestic alternative division head, Soo-Cheol Lee, the strategic research team leader under the investment strategy division, was promoted. Lee will head the NPS’ private equity, real estate and infrastructure investments at home. Given that he will handle the selection of external management firms, his position is seen as the most powerful in the South Korean financial industry. But despite his reputation for pension fund investment strategy and planning in the country, he lacks alternative investment experience and networks.

Sung-Tae Park, picked as the head of the risk management center, has been temporarily sitting on the position since March.

 

By Chang Jae Yoo and Dong Wook Jwa

koreaninvestors@hankyung.com