이 기사는 2021년 04월 06일 07시49분 thebell에 표출된 기사입니다

Smaller limited partners in South Korea face difficulties in figuring out how to integrate the New Deal concept and ESG (environmental, social and governance) factors, the two major requirements included in investment mandates awarded or to be awarded by larger institutional investors.

Korea Development Bank (KDB) and Korea Growth Investment Corporation in February jointly awarded private equity mandates to investment firms that in turn need to raise funds totaling 2 trillion won ($1.7 billion) in the next few months. The mandates required the selected firms to invest a certain portion of their funds’ total committed capital in sectors specified in the government’s New Deal guidelines.

Other large institutional investors, such as National Pension Service (NPS) and the Export-Import Bank of Korea, also recently issued requests for proposals seeking private equity managers, with an increasing emphasis on ESG factors.

Investment firms selected by these large LPs will likely pay attention to tender processes that will be launched in the coming months by smaller LPs as they seek to raise additional capital for their funds. However, unlike their larger peers, smaller institutional investors are having difficulties setting up the criteria for the New Deal concept and ESG factors.

“Large LPs such as KDB and NPS are stepping up efforts to integrate the New Deal or ESG concepts into investment mandates,” an industry insider said. “In contrast, smaller LPs are even confused about the definition of these concepts.”

Some of the smaller LPs are reportedly considering just giving advantage to investment firms selected by large LPs. Others are considering dividing categories to separate New Deal mandates from regular ones.

There are also concerns among these LPs about how to evaluation performance of New Deal and ESG investments. (Reporting by Seon-young Kim)