Govt pension fund to ease due diligence to revive global deals

South Korea's Government Employees Pension Service (GEPS) has abandoned its onsite only due diligence requirements on alternative deals in an effort to revive overseas investments.

Its top decision-making body recently decided to embrace various methods of due diligence, including contactless ones, according to investment banking sources on June 14.

Under its previous guidelines, GEPS had to put cross-border investments on hold since the global pandemic began, let alone committing capital to global funds. Instead, it had concentrated on domestic deals.

Onsite inspections were deemed necessary as part of risk management, verifying the investment target's existence and checking the validity of an outside manager's proposals as well as its internal risk management system.

To overcome the pandemic-caused travel restrictions, however, the National Pension Service, the Korea Investment Corporation and the Korean Teachers' Credit Union have shifted into contactless due diligence methods, or authorizing their overseas offices to carry out due diligence on target assets and outside managers. 

GEPS' eased due diligence guidelines come as it is in the final stages of selecting global infrastructure managers to commit $105 million in aggregate. The mandate will mark its first commitment to global infrastructure funds.

This year, GEPS will be also diversifying into logistics and data centers, as well as private debts. It manages 8.2 trillion won ($7.4 billion) in financial assets.

Write to Jung-hwan Hwang at jung@hankyung.com
Yeonhee Kim edited this article.