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NPS to award over $2.3 bil private equity mandate this year Three PE firms expected to be selected in July

Translated by Kim So-in 공개 2022-05-20 07:53:40

이 기사는 2022년 05월 20일 07:36 더벨 유료페이지에 표출된 기사입니다.

South Korea’s National Pension Service (NPS) is expected to award more than 3 trillion won ($2.3 billion) of private equity (PE) mandates this year, up by about 1 trillion won from 2 trillion won in 2021.

NPS reportedly received proposals from 11 PE firms for its annual tender, according to industry sources on Wednesday. The competition rate was 3.6:1 as the pension scheme is hiring three managers.

NPS reportedly awarded mandates totaling 2 trillion won to domestic private equity firms last year through its annual tender and on a frequent basis. The pension scheme announced earlier this year that it will commit 500 billion won to private equity funds and up to 150 billion won to venture capital funds. Yet, its commitments will actually increase to some 3 trillion won this year as it will expand commitments on a frequent basis.

Most of the mandates are expected to be awarded based on its new best manager system. Under the system, NPS' existing PE managers with their funds' internal rate of return above 12% are allowed to receive mandates without having to go through a competitive bidding.

A total of eight PE and venture capital firms were reportedly selected as best managers at the end of last year, of which STIC Investments and SkyLake Investment submitted their proposals. They are required to go through complicated procedures including individual and external screening instead of the competitive bidding. NPS’ commitments to the two managers are expected to exceed 500 billion won.

Best managers are also allowed to receive more than twice as much their previous mandates. They can receive the greater of 2-2.5 times the previous mandate from NPS or capital returned to NPS.

NPS’ annual tender process is expected to be completed in early July. The pension fund is currently reviewing the received proposals and is expected to pick six managers and announce them in mid-June. The pension fund will then select the final three managers through a committee meeting. (Reporting by Hyo-jung Lim)
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