Korean construction workers’ fund to increase offshore private debt exposure

Seoul-headquartered Korea’s Construction Workers’ Mutual Aid Fund (CWMA) is looking to increase its exposure to the US private debt market, according to its latest request for proposals issued for offshore senior-secured debt managers.

Ju-young Gong, an investment officer at CWMA, told Private Debt Investor that the fund plans to invest in a US direct lending blind fund through a fund of funds vehicle that will be set up in Korea.

PDI understands that CWMA will be setting up a domestic fund of fund vehicle that invests in US direct lending blind fund via a local asset management company, according to its investment policy statement.

The Korean investor will receive proposals for the US direct lending strategy by February 12 and complete the selection by April, according to a statement issued last week.

In addition, CWMA is also planning to expand its overseas debt portfolio by pursuing an offshore distressed debt strategy by next year, said Gong.

CWMA made its debut offshore private debt deal in May last year by making a $40 million commitment to a London-headquartered private credit manager, Park Square Capital Partners’ Park Square Capital Credit Opportunities III, a pan-European senior-debt fund launched with a €500 million target in 2016.

In the same month, the investor also committed $40 million to Goldman Sachs’ Broad Street Real Estate Credit Partners III, the $4.6 billion-sized global real estate debt fund, targeting both mezzanine and senior debt investments.

The investor also plans to commit to offshore secondary funds this year for both private equity and infrastructure to mitigate the J-curve effect, explained Gong.

PDI understands that CWMA currently allocates over nine percent of its portfolio to offshore alternative investments across the US, Europe, and Australia. The investor’s total assets under management increased to W3.5 trillion ($3.2 billion; €2.6 billion) from W3 trillion year-on-year as of end-2017.

CWMA’s cost of capital is over five percent this year, which is relatively higher than that of its domestic peer group, ranging from three to four percent.

“We debuted an offshore alternative investment strategy last year, and we plan to gain further exposure to the US market, with a focus on the multi-family sector,” said Gong.