The Construction Workers Mutual Aid Association (CWMA) plans to allocate about $40 million to a US blind-pool fund house of direct lending and senior-secured loans in expectation of US interest rate rises, according to the South Korean retirement fund.
The private debt fund to be selected is required to use a multi-manager model which involves multiple managers in the same fund to spread risk.
CWMA will receive proposals for the investment by Feb. 12 at 6 p.m. (Korean standard time) and complete the selection by around mid-April, it said in a RFP posted on its website on Jan. 29.
“As the US interest rates are set to rise further, we decided to invest in loans, rather than making equity investment,” the Financial News, a South Korean news outlet, quoted CWMA’s Chief Investment Officer Jung-su Han, as saying.
The target IRR is 7 to 10%, according to the report.
It will be CWMA’s first allocation to a US private debt fund, after committing 40 billion won ($37 million) to a senior-loan private debt fund of UK-based Park Square Capital last year.
The term of the US PDF should be around 10 years, including the investment period of about five years.
Qualified managers should have at least three years of experience with at least $300 million in cumulative assets of private debt.
<Edited by Yeonhee Kim>
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