Korea’s POBA selects five GPs for private debt

The investor is ramping up its allocation to the asset class in the US and Europe.

South Korea’s Public Official Benefit Association (POBA) has allocated a total of $120 million to five asset managers to invest in senior debt strategies, according to a POBA source.

POBA has committed $30 million each to Guggenheim Partners and Alcentra while committing $20 million each to Medley Capital, BlueBay and Park Square Capital.

Dong Hun Jang, the chief investment officer of the fund, thinks that although private equity potentially generates a higher return, private debt provides more stable income and cash flow for pension funds like POBA.

According to a recent request for proposal (RFP) issued by POBA, the pension fund said it was in the process of selecting managers for a total commitment of $300 million to private equity, private debt (mezzanine or distressed) and others (secondary, funds of funds and co-investment).

In June 2016, POBA allocated a total of $100 million to Benefit Street Partners, Babson Capital Management and Permira for private debt investment.

Last year, the organisation committed over $640 million to private debt investment outside the real assets category, including $120 million to private debt funds, $100 million to CLOs, $120 million to mezzanine debt, and about $300 million to structured notes.