Korea Post Savings published a request for proposals (RFP) seeking a direct lending fund manager on its website last Thursday (26 May). According to the announcement, the state-run bank is looking to commit about $100 million per fund to as many as three funds focused on senior direct lending in North America and Europe.
According to the announcement, Korea Post is seeking funds with net IRR of 6 percent or higher, a maximum performance fee of 20 percent and a minimum of $500 million in assets. The RFP also stipulates that funds must be currently established, or established within the second quarter of 2016 and eligible to register as foreign investment vehicles under the Korean Financial Investment Services and Capital Markets Act.
Korea Post's RFP also says that winning GPs will commit at least 2 percent of total committed capital (or $10 million) to their own fund and that no single portfolio company should make up more than 35 percent of the entire fund. In addition, the RFP says that the GP must provide Korea Post with at least one co-investment opportunity every six months
Applications are due by 10 June, with fund selection expected to be finalized by 29 July.
The move into direct lending comes alongside other indications that institutional investors in Korea are increasingly participating in international private markets. Korea Post also recently released an RFP for $400 million in real estate commitments, reported PDI sister publication PERE .
The Korea Public Officials Benefit Association has reportedly increased its use of collateralised loan obligations and other private debt strategies as part of an effort to increase international investment. In April, Korean insurance company KB insurance signed an agreement with Natixis to co-invest in global infrastructure and aviation deals. One US banker recently toldPDI sister publication Real Estate Capital that Korean investors often come into deals together with banks and seek to make investments in mezzanine debt.
Korea Post Savings is the government-backed savings arm of the national postal service of Korea with $60 billion in assets.