POBA to add to US lending strategy

The Korean pension fund has put out an RFP to hire private debt managers for US direct lending mandates.

Korea’s Public Official Benefit Association (POBA) is looking to increase its exposure to the US debt market and has issued requests for proposals for mid-market senior-secured debt managers.

POBA said it will focus on strategies featuring senior, senior stretch and unitranche structures. However, mandate sizes, terms and the number of managers POBA will engage are still being discussed internally, an investment manager from POBA told PDI on Monday.

Asked whether the fund is replacing existing managers or new rosters to its portfolio, the investment manager said: “We awarded several direct lending mandates earlier this year and plan to add more managers throughout this search.”

POBA has been an active investor in US private credit strategies this year, including a $30 million commitment to Guggenheim Partners and $20 million to Medley Private Debt’s third opportunity fund – Medley Opportunity Fund III – In March 2017.

POBA also committed to two US debt managers in 2016: Benefit Street Partners and Babson Capital Partners.

Applicants for the RFP must provide a track record of at least 10 years in US direct lending. POBA also requires candidates to work with domestic managers or brokerage firms as it prefers to establish a local fund monitoring process.

In 2016, POBA committed over $640 million to private debt investment including $120 million to private debt funds, $100 million to CLOs, $120 million to mezzanine debt, and about $300 million to structured notes, PDI data notes.

POBA allocated 11.7 percent or W1.1 trillion ($1 billion) to corporate private investments including private equity and private credit as of end-2016, according to the fund.