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Pension funds

NPS to create private debt, secondaries-focused team

The newly-created team will belong to PE & VC investment division

By Aug 26, 2021 (Gmt+09:00)

NPS to create private debt, secondaries-focused team 

The National Pension Service (NPS) is planning to create a new investment team dedicated to private debt and secondaries deals and equity purchases of asset managers, which have been neglected by the world's third-largest pension scheme despite its steady asset growth.

The alternative strategy & investment team to be established will become the fourth subdivision of the Private Equity & Venture Capital Investment Division, after its three teams each focused on Asia, Europe and North America, according to financial industry sources on Aug. 26.

To set up the new team, the South Korean pension fund will revise its internal regulations after listening to the industry officials' feedback by Aug. 30.

Specifically, the alternative strategy & investment team will be in charge of drawing up investment strategies and deal sourcing; executing investment and making post-investment management; selecting GPs and advisory firms for post-investment management; and forming strategic alliances to expand investments in the private equity and venture capital segments.

Of the 61.2 trillion won the NPS has committed to private equity and debt funds  as of the end of last year, secondaries accounted for just 5.3%. Buyout deals took up the bulk of 56.4%.

The move to boost up private debt and secondaries deals comes about a month after the NPS decided to authorize its working-level officials to proceed with deals worth less than $100 million apiece, with an aim to speed up small-size alternative investments.

Currently, the NPS' Investment Management department runs seven divisions for Domestic Equity, Domestic Fixed Income, Global Equity, Global Fixed Income, Private Equity & Venture Capital Investment, Real Estate Investment and Infrastructure Investment.

In 2019, it reorganized the alternative investment management division by asset class, creating the three divisions for PE & VC, real estate and infrastructure. Each of the three divisions runs three teams dedicated to Asian, US and European deals, respectively.

As of the end of June, NPS' assets under management reached 908.3 trillion won ($776 billion), with a provisional return of 7.49% for the first half of this year.

Write to Jong-woo Kim at jongwoo@hankyung.com

Yeonhee Kime edited this article.

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