[ASK 2018 SUMMIT Panel Talks] NPS keen on mid-cap PE; KIC eyes non-sponsored deals

  • 2018-06-06

The National Pension Service (NPS) plans to commit fresh capital to about four additional mid-cap private equity funds this year, focusing on the managers’ ability to maintain their price discipline, said its global private equity head.

Korea Investment Corporation (KIC) will chase non-sponsored, rescue-financing and complex deals as the sponsored-deal market becomes crowded.

Both institutions are giving more authority to their overseas offices to lead private equity and debt investments.

The following are remarks from senior officials of NPS and KIC in a panel discussion during the ASK 2018 Private Equity & Debt Summit in Seoul on May 29.

▶ NPS (Hyung Don Choe, head of global private equity):

Hyung Don Choe, head of global private equity for NPS

Hyung Don Choe, head of global private equity for NPS


“We are more aggressive with mid-cap strategy. We plan to select about four new GPs for mid-cap strategy this year.”

“For large buyouts, we certainly require co-investing to create alpha. We co-invest only when giving $100 million equity check. For $50 million equity check, we invest through funds of funds.”

“Because of intense competition for co-investment, we are studying various ways to secure good deals and build strategic relationships.”

“Buyouts take 65% (of private equity). We commit about 4 trillion won every year. North America and Europe account for 90%, with Emerging market 10%.”

“We call for over 10% returns on private equity. Private equity portfolios have been meeting target returns so far.”

“We slightly reduced commitments to private equity funds in 2017 from 2016. We are looking closely at whether they keep price discipline when selecting PE managers.”

“The ratio of funds and co-investments is 8 to 2. Secondaries take about 6%. We see secondaries as opportunistic and adjust portfolio, depending on market conditions.


“After we changed benchmarks in 2014, we call for 6 to 10% returns (on private debt investments). We don’t make direct lending.”

“The proportion of distressed and special situations has decreased recently. We are in discussion with GPs how to deploy capital aggressively to distressed and special situations when an opportunity comes.”

“Because of the long and complex process, we have no plan yet to be aggressive with venture capital investment.”


“We are giving some private mandates to overseas offices. The UK office is leading secondaries and distressed and special situations. The US office leads the US mid-cap and large-cap co-investments.”

▶ KIC (Jae-Won Shin, director of private equity):

Jae-Won Shin, director of private equity for KIC

Jae-Won Shin, director of private equity for KIC


“As competition is intensifying after active fundraisings, we are looking for non-sponsored, corporate, rescue-financing and complex deals, rather than sponsored and direct deals.”

“Because we are seeking long-term holdings and under less pressure of matcing assets and liabilities, we take more aggressive strategies than other domestic LPs.”

“Our private debt investment has been focused on developed countries and made through funds so far. Because of relatively low expected returns, we invest mainly through funds for private debt investment.”


“For private equity, we are investing in both frontier markets and opportunistic strategy. We are aiming for mid-teens for private equity and debt deals.”

“Market fatigue lingers after years of high valuations in PE markets, but we think that talented GPs are increasing value-creation capacity. Rather than actively responding to market conditions, we deploy capital on a constant basis.”

“There are various value-creation opportunities for buyout strategy because of deep manager pool and more control over GPs. We plan to keep the portion (of buyouts) at a minimum 50% to a maximum 60%, regardless of investment cycles.”

“We are aggressively chasing co-investments. The deal size of co-investment is becoming bigger.”

“Secondaries are meaningful as a risk management tool for KIC and other South Korean institutions to diversify vintage, on top of quick cashflows. Price is important.”

“It is negative that discounted deals compared with net asset value are dwindling because of high market valuations. We have been investing in secondary blind funds on a steady basis.”


“The headcount in our New York, London and Singapore offices is three, two and one, respectively. We expect the numbers will increase significantly in the long term. As an Asian investor, frequent communication is important.”

“Our head office is giving full support to overseas offices so that they can have capital ownership, not functioning just as a representative office.”

By Chang Jae Yoo


<Edited by Yeonhee Kim>