Korean Teachers’ fund commits $50 mn to Neuberger Berman’s unit

The Korean Teachers’ Credit Union (KTCU) has recently committed $50 million to a new fund of Dyal Capital Partners, part of US-based investment firm Neuberger Berman, expecting steady returns from the fund which targets minority stakes in private equity firms.

Last year, KTCU had committed $36 million to the predecessor fund, Dyal Capital Partners III, and made a co-investment of $30 million with the fund, Yonhap Infomax reported on Feb. 5, citing an unnamed KTCU source. KTCU confirmed the report.

Dyal Capital closed the third fund with approximately $5.3 billion in committed capital in December 2016, above its target by more than $2 billion.

“Dyal Capital Partners III is expected to bring double-digit returns. Its dividend yield is likely to top 10% per year on average,” Infomax quoted the source as saying.

“Its fourth fund will offer steady returns, too, taking advantage of Neuberger Berman’s excellent networks and experience,” said the source, adding that Dyal Capital’s niche strategy will help generate cashflows from the early investment stages and mitigate the J-curve effect.

The gross IRR of the third fund, which has made investments in 10 firms, exceeded 30% as at the end of June 2017.

Dyal Capital Partners IV targets 10 to 25% equity interests in private equity firms with an investment period of 15 years.

PE firms will spend the injected capital on expanding new investment platforms, and as general partner commitments.

Investors in Dyal Capital Partners’ funds receive proceeds on a quarterly basis, which consist of management and performance fees and investment proceeds earned by the PE firms, in proportion to their equity stakes.

KTCU is South Korea’s biggest retirement fund with $27 billion in AUM.

Separately, it recently had invested 50 billion won ($46 million) in a mezzanine debt on two resort hotels in Orlando, Florida, through Hangang Asset Management Co. Ltd., according to the MoneyToday, a South Korean news outlet, on Jan. 29.

By Hugh YH Jeong

Hugh@hankyung.com

Photo: Getty Images Bank