[RFP] POBA seeks private credit SMA managers for $200 mn

The Public Officials Benefit Association (POBA) will select two global private credit managers to invest around $200 million in mezzanine debt via separately managed accounts (SMAs).

POBA will allocate $100 million to each of two SMAs through two domestic investment firms which it will pick separately, POBA said on June 27.

The $8 billion South Korean savings fund will receive proposals for the mandate until July 7 at 3 p.m. (Korean standard time).

POBA is aiming for annual returns of around 6% to 7% from the investment, or 3% points plus its payment rate of 3.4% made to subscribers at end-June.

Its target net IRR is around 8%, including liquidation proceeds of the accounts, for a seven-year mandate.

“We will select management firms which are able to pay a dividend immediately, unaffected by the J-curve effect,” POBA’s Chief Investment Officer Dong-hun Jang told the Korean Investors.

Qualified global managers must have track records in the liquidation of a private credit commingled fund and have been managing an SMA with the same strategy as of end-2016.

They are required to submit proposals via South Korean brokerage houses.

For domestic fund houses, they must run a fund of overseas private equity or debt funds with an outstanding value of a minimum $100 million.

About the reason for hiring domestic fund houses independently of global managers, a POBA source said that it wants to have closer consultations for the SMA investment.

POBA has been leading overseas private debt investments among South Korean pension and savings funds. Alternative assets at home and abroad represented about half of its 9.4 trillion won ($8 billion) in assets at the end of last year.

Recently it has invested around 330 billion won in European real estate through an SMA which allows it to choose investment targets and to make a speedy investment, too.

By Daehun Kim

daepun@hankyung.com