Swedish private equity firm EQT Partners is gathering €60 million ($70 million) from two South Korean retirement funds and seeking to raise an additional capital from two to three other institutional investors in the country for its new €2 billion ($2.3 billion) credit fund, a local media reported on August 1.
Korea Scientists and Engineers Mutual-Aid Association (SEMA) and Yellow Umbrella Mutual Aid Fund will commit €30 million respectively to the fund for direct lending, a type of strategy the new fund will use, according to Financial News, a South Korean news outlet.
The direct lending strategy is to provide debt to medium-sized companies, or to finance private equity-led acquisitions of such firms.
The credit fund, for which EQT plans to raise €2 billion in total, targets an average IRR of 6~8% from direct lending, the newspaper added.
“Direct lending strategy targets companies which can pay 6 to 8% interest rates for lending,” it quoted an unnamed IB source as saying. “European companies are making steady growth, so we expect it to generate stable returns.”
No further details were immediately known about which other strategy types EQT will use for the new credit fund.
EQT’s credit investment platform is currently focused on three strategies: senior debt, direct lending and credit opportunities, with accumulated investments at 5 billion euros, according to its website.
Earlier this year, SEMA, a $4.5 billion South Korean retirement fund, committed €28 million to a mid-cap private debt fund of French asset manager Tikehau Capital, following a €28 million commitment to a Europe mid-market private debt fund of BlueBay Asset Management LLP late last year.
Yellow Umbrella Mutual Aid Fund is South Korea’s savings fund for small-sized business owners.
<Edited by Yeonhee Kim>
Photo: Getty Images Bank