KTCU commits $100m to two GP minority stake funds – exclusive

The Korean institution has re-upped with Dyal Capital Partners, which is targeting a net IRR of 15%.

Korean Teachers Credit Union (KTCU) has committed $100 million across two funds with Dyal Capital Partners, according to two sources from the pension fund who requested anonymity.

The Seoul-based Korean savings fund committed $50 million to Dyal Capital Partners Fund IV in December 2017. This was a follow-on commitment after its first commitment of $50 million to its predecessor, Dyal Capital Partners Fund III, in July 2015.

KTCU is the first Korean institution to have committed to funds that invest in GP minority stakes. Dyal Capital Partners, a unit of Neuberger Berman Group, held its final closing on its Fund III at $5.3 billion in 2017.

Fund III has a 13 year-life and targets a net internal rate of return (IRR) of 15 percent.

Dyal Capital Partners offers KTCU four exit options: Listing GP minority fund stakes; listing each investee company or GP; seeking strategic buyers for trade sales; or issuing notes based on underlying cash flows that are generated by Dyal’s fund investments.

Dyal Capital Partners Fund III has been returning double-digit dividend income to investors. It is understood that at least two other Korean institutions, including an insurance firm, have committed to Fund III.

A spokesperson from Dyal Capital Partners could not be reached for comment by publication time.

Speaking to the source about any possibility for the fund manager to recycle committed capital, he said: “Unless they (Dyal Capital) actively pushes through with trade sales for fast exits, this strategy has no room for capital recycling.”

KTCU managed 13 trillion won ($11.6 billion; €10 billion) in alternative assets, accounting for 39 percent of its total investment portfolio sized at 33.5 trillion won as of end-June. The pension fund managed 1.5 trillion won in offshore private investments while managing 4.8 trillion won in offshore real assets.