Five private debt firms win $120 mn mandates from Korean govt employee fund

The Public Officials Benefit Association (POBA), a South Korean savings fund for government employees, has wrapped up its selection of five overseas private debt fund managers to allocate a total of $120 million, said a POBA source on March 19.

After the capital commitment, POBA is likely to deploy more than $100 million to overseas private debt funds (PDFs) in the second half of this year on expectations of further interest rate increases.

It picked two US-based asset managers – Guggenheim Partners and Medley Capital – and three European investment firms – Alcentra, BlueBay and Park Square Capital for this round of private debt investment.

POBA has committed $30 million each to Guggenheim and Alcentra which received the highest evaluation scores for the respective region, and entrusted $20 million to the other four management firms, respectively.

The five asset management firms are known to invest primarily in senior secured debts which are expected to generate an annual return of around 5% on a steady basis.

POBA has been ramping up investments in overseas private debt funds. Last June, it committed a total of $100 million to Benefit Street Partners, Babson Capital Management and Permira for private debt investment.

“PDFs can make even higher returns, if US interest rates rise gradually,” said the POBA source.

By Donghun Lee

leedh@hankyung.com