Korea police fund picks CIO from outside; gives $90 mn mandates to 6 firms

Sep 20, 2016 (Gmt+09:00)

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South Korea’s police savings fund has appointed a former fixed-income head of Samsung Asset Management as its first chief investment officer from outside, according to investment banking sources on Sept. 19, breaking away from its tradition of choosing one from within the police force to take charge of its financial asset management.

The appointment of Do-yoon Lee as the CIO of the Police Mutual Aid Association (PMAA) came as it selected six management firms to entrust a total of 100 billion won ($90 million) in blind-pool funds for alternative investments, ranging from private equity and private debt to venture capital.

It is also the first time for the association to pick management houses for alternative investments simultaneously. The South Korean fund, which oversees about 2 trillion won ($1.8 billion) of assets under management, plans to put an additional 100 billion won into investment firms around 2018 by when the committed capital will likely be depleted.

PMAA had modified the articles of association last March in order to create the CIO position and open the door to those from outside. Unprofessional financial managers, some of which served as police superintendents, were blamed for its poor returns seen in the past few years.

Earlier this month, the association’s board of representatives, composed of about 40 ex-police officers, had passed the proposal of designating Lee as its CIO. Upon approval of commissioner general of the Korean National Police Agency, he will be installed around October.

The CIO-designate studied business administration at Yonsei University in Seoul, and started his career in Korea Investment Trust in 1990. He served as the fixed-income head of Korea Investment Management from 2005, and headed the fixed-income division of Samsung Asset Management, the country’s biggest fund management firm, from 2013.

Meanwhile, PMAA has picked Benefit Street Partners and Park Square Capital to invest $20 million in private debt funds focused on North America and Europe, respectively. They are the first foreign PDF managers chosen by the police fund.

For domestic private equity fund investments, SkyLake Investment and Dominus Investment are set to receive 20 billion won ($18 million) each. PMAA will also put 10 billion won each into South Korea-based Atinum Investment and Medici Investment for local venture capital investments. PMAA will deploy the combined 100 billion won on capital calls whenever investment targets are set.

At end-2015, alternative assets accounted for 47.6% of PMAA’s portfolio, trailed by fixed-income investments with 44.3% and equities with 4.9%, according to its website. The bulk of the investments are in domestic assets.

By Daehun Kim

daepun@hankyung.com