HPS, Crescent Capital win Korean pension fund’s $100 mn PDF mandates

Sep 12, 2016 (Gmt+09:00)

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The Government Employees Pension Service (GEPS) will commit $50 million to U.S.-based HPS Investment Partners and Crescent Capital Group each for overseas private debt investments, about a year after the South Korean pension fund picked two private debt fund houses to invest €60 million in Europe.

The commitment, announced on September 6 on GEPS’ website, reflects growing interest among South Korean investors in North America-focused PDFs as tightened financial regulations in the United States has led companies to turn their eyes on private loans, rather than lending from financial institutions. The Police Mutual Aid Association, a South Korean savings fund, is also scouting for a PDF manager.

GEPS had started looking for global PDF managers last July to make loans to companies or buy corporate bonds. As conditions for the mandate award, the government employee pension fund required PDF managers to invest at least half of the total committed capital in North America and limit equity investment to under 30%.

“We selected managers that meet pension funds’ management philosophy of consistent management, rather than those that posted one-time outstanding performance,” a GEPS source told the Korea Economic Daily.

Los Angeles-based Crescent Capital, which is in a mezzanine fund-raising process, is also set to receive a $100 million investment from the Teachers’ Pension of South Korea, according to the South Korean pension fund for private school employees last week. HPS Investment, headquartered in New York, acquired Highbridge Capital Management, a unit of J.P.Morgan, earlier this year. It oversees about $30 billion of assets under management.

By Daehun Kim

daepun@hankyung.com