Oaktree partners with Korean pension

The distressed investment specialist has teamed with South Korea's National Pension Service to jointly pursue investments in private equity, special situations and real estate.

Oaktree Capital Management has struck a “strategic partnership” with the W229 trillion ($165 billion; €120 billion) Korea National Pension Service to explore investment opportunities in Korea.

The pension's contribution to Oaktree's private equity, real estate and special situations opportunities in the country could be pursued by way of co-investments or by via commitments to Oaktree funds, the pension fund's head of global investments, Daeh-hwan Kwag, told PEO.

“We have not yet finalised the specifics,” Robert Zulkoski, a managing director at Oaktree and head of its Asian real estate effort, told PEO.

He added that while the core focus will be on opportunities in Korea, the relationship can expand globally as appropriate. “This is an expansion of an existing relationship between NPS and Oaktree,” he said.

The National Pension Service has in the past invested in two of Oaktree’s private equity funds focused on distressed opportunities, Kwag said, without elaborating further.

Oaktree wants to expand its investment efforts in Korea for the long term, managing director of Oaktree Steven Choi said in a statement. The effects of the global credit crisis are also being felt in Korea, he said, and added that Oaktree is “ready to provide tailored solutions across the capital spectrum”.

National Pension Service currently allocates 2.9 percent of its assets to alternative investments. It invests in infrastructure, real estate, private equity, venture capital and distressed investment funds. Its allocation to alternatives can go up to a maximum of 10 percent of its portfolio by 2012.

In March, the National Pension Service was in the final stages of making a $300 million commitment to TPG’s credit fund, which was then thought to be targeting $7 billion for investing in troubled financial companies mainly in North America and Europe.

At the time, Kwag said that the pension fund was looking to increase its allocation to private equity funds over the next five years.

Headquartered in Los Angeles, Oaktree manages assets of more than $58 billion as of June 2008. It focuses on investments in niche debt strategies, specialised private equity, mezzanine finance, real estate, and Japanese and emerging markets securities. In May this year, it closed the largest ever distressed debt fund on $10.9 billion.