Antares Capital raising $200 mn from Korea for private debt fund

Antares Capital LP, a leading US middle-market lender, is raising $200 million from South Korean institutional investors for a private debt fund to which the Public Officials Benefit Association (POBA) and the Police Mutual Aid Association have recently committed $100 million in aggregate.

The new fund is expected to deliver an IRR of over 8% for a seven-year investment period by lending to middle-market US companies with earnings before interest, tax, depreciation and amortization of $10 million to $100 million, according to banking sources on Feb. 14.

The Police Mutual Aid Association (PMAA), a $2 billion retirement fund for South Korean police officers, has committed $30 million to the debt fund, following POBA’s recent commitment of $70 million.

“It is an interest rate rise hedged product in a period of rising interest rates because it provides variable rate credit facilities,” a PMAA source was quoted as saying by Yonhap Infomax last week.

Shinhan Financial Group’s alternative investment arm, formerly Shinhan Private Equity Inc., is raising the commitments from South Korean investors on behalf of Antares through a fund of funds.

The target fund size was not immediately known.

Chicago-based Antares is wholly owned by Canada Pension Plan Investment Board (CPPIB) and invests in loans to middle-market, private equity-backed companies. CPPIB acquired Antares Capital in 2015.

In 2016, PMAA committed $20 million each to Europe-based Park Square Capital and US-based Benefit Street Partners in its first investment in global private debt funds. The two funds have generated an IRR of over 7%, according to Infomax.

South Korean institutions are among the largest investors in real estate debt, making up the largest proportion (30%) of real estate debt investors in Asia-Pacific, according to JLL’s recent report.

Golub Capital, a US investment firm, has also raised more than $100 million from South Korean institutional investors for a new private debt fund from POBA, Korea Scientists and Engineers Mutual-aid Association and brokerage firm Shinhan Investment Corp.

By Daehun Kim

daepun@hankyung.com