Korea’s NPS seeks alternatives managers for $1.9bn domestic mandates

The world’s third-largest public pension fund will also accept foreign GPs’ proposals if they have a presence in Korea.

The National Pension Service of Korea (NPS), the world’s third-largest pension fund in assets under management, has issued three requests for proposals (RFPs) across private equity, infrastructure and real estate investments.

The prospective mandate size is worth up to $1.9 billion across the asset classes. The pension fund is searching for GPs with funds investing in domestic alternative assets.

NPS is seeking up to two GPs  which have funds investing in non-performing loans  for mandates worth 200 billion won ($177.6 million; €153.6 million) apiece. It also plans to offer up to two GPs 400 billion Korean won mandates per manager in large-cap private equity and up to two venture capital managers with mandates of 60 billion won apiece.

For infrastructure investments, NPS is particularly looking for GPs with funds investing in renewable energy.  The RFP specifies that once these mandates are awarded, they can invest in offshore assets worth up to 30 percent of NPS’ prospective commitment size. The pension fund plans to hire up to two GPs with mandates worth 150 billion won per manager.

For its real estate investments, the pension fund is looking for  core and core-plus strategies. It plans to mandate up to two GPs which can either manage REIT vehicles or domestic real estate funds worth over 50 billion won. For this domestic RFP, the Korean pension fund excludes funds investing in project financing, real estate debt, and offshore real estate assets.

Although the RFP is for domestic mandates, NPS will accept applications from offshore GPs if they have a presence in Korea. It has set a deadline for proposals of 3pm on 20 September Korean time via mail.

There  were 35 foreign investment firms that  had  a presence in Korea  either through asset management or investment advisory businesses, as of end-March, according to a public disclosure on 19 June by the Financial Supervisory Service (FSS), the financial industry regulatory body in Korea.

The list included CBRE Global Investors, Lasalle Asset Management, and Macquarie Asset Management, among others.

For offshore alternatives, NPS tends to seek investment advisory services from a pool of consulting firms per alternative investment strategy, a spokesperson from the pension fund confirmed to PDI.

PDI understands that NPS’ advisory pool includes Mercer, a New York-based consulting firm, and Cambridge Associates, a Boston-headquartered consulting firm.

NPS’ assets under management in global alternative investments increased by 503 billion won year-to-date as of end-May, according to its latest monthly disclosure posted on 27 July.

The pension fund plans to allocate 92.6 trillion won to global alternative investments by end-2019, according to a public disclosure from the Ministry of Health and Welfare of Korea in May.

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