Korea’s POBA seeks mezzanine debt fund manager

Public Officials Benefit Association is targeting a net IRR of more than 10 percent, with a five percent-plus dividend return, for the mandate.

Public Officials Benefit Association has disclosed that it is looking for an offshore private fund manager that invests in junior or mezzanine corporate debt.

The savings fund will target a net IRR of more than 10 percent for the planned commitment, with a dividend return of more than five percent in annualised terms.

The search is part of POBA’s planned alternatives allocation in the second half of the year, which spans buyout and growth, secondaries, and mezzanine investments. The fund plans to commit up to $150 million, or the equivalent amount in other currencies, across the three strategies, according to a request for proposals.

It is looking for both regional and global funds that have track records in first-lien, second-lien and mezzanine-debt investment. Submissions are due on 29 July.

Open-ended funds and multi-credit funds are part of POBA’s consideration, a source familiar with the matter confirmed to Private Debt Investor. The Korean LP, however, is excluding senior loans, CLO funds that mainly invests in debt tranches, real estate, and infrastructure debt strategies for this search.

Data compiled by PDI show that the LP has committed $50 million to Ares Private Credit Solution. The fund held a final close on $3.4 billion, as per Ares management’s disclosure in December 2017. The private credit solution fund series focuses on junior debt financing to private equity-backed companies in the upper-middle market in North America.

Another Korean investor, Korea Post, has been looking to gain further mezzanine exposures overseas. It has awarded $50 million to Principal Asset’s mezzanine note backed by real estate assets in the US, as PDI reported this month. The mezzanine structure typically refers to junior lien behind that of senior lenders, which is subject to an inter-creditor agreement.