NPS commits $723 mn to MBK, 3 other managers for Korean PEs

South Korea’s National Pension Service (NPS), the world’s third-largest pension fund, has hired four investment firms – MBK Partners LLC, JKL Partners Inc., Praxis Capital Partners Co. and Premier Partners LLC – for domestic private equity management, banking industry sources said on Monday.

The pension fund will commit a combined 1 trillion won ($723.2 million) to the four PE managers, compared with 800 billion won to three investment firms last year. The new commitment allots 100 billion won-350 billion won to each manager.

The four investment managers beat four other Korean firms in the final competition earlier this month – VIG Partners, Korea Investment Private Equity, Well to Sea Investment and Private Equity, and J& Private Equity.

The PE managers’ track record in large buyout deals amid the liquidity crunch was a key standard for selection, said banking industry sources.

North Asia-focused MBK Partners, which manages more than $30 billion in capital, has been considered a strong candidate due to its track record and deal volume.

JKL Partners stood out by selling a 14.90% stake in Korean low-cost carrier T'way Air Co. for 105.6 billion won to the country’s leading resort operator Sono International Co. earlier this month, with an option to divest of the remaining 11.87% stake to the buyer by the end of September. 

Praxis Capital Partners garnered market attention by selling Doosan Robotics Inc. shares for 120.8 billion won last year, about six times the purchase price in 2021. NPS tapped the investment firm for domestic private equity in five years.

Premier Partners earned more than 100 billion won in gain via the initial public offering of gaming developer Krafton Inc. and a 450 billion won gain by selling a 10% stake in SK IE Technology Co. (SKIET) for 750 billion won in 2021. 

NPS managed 1103.5 trillion won as of the end of April. Of this, it allocated 178.5 trillion won to alternative assets, 16.2% of its assets under management (AUM). The pension fund’s private equity and debt investment totaled 74.2 trillion won at the end of April, making up 42.7% of its alternative asset portfolio.

The pension scheme will hire more alternative asset managers in Korea, pick three firms for credit and distressed debt in September and four venture capital companies in November.

Write to Seok-Cheol Choi at dolsoi@hankyung.com

Jihyun Kim edited this article.