Korea’s NPS boosts overseas PE exposure

"NPS aims to improve risk-adjusted return through investment in overseas private equities," Yang Young-sig, head of global private market at the investment division of NPS, said at a conference according to The Korea Herald. "By region, we will increase its proportion to 30% in Asia and emerging markets from the current 12%. By strategy, we will increase the proportion of mid-cap buyouts to 25%."

This effort is expected to include an expansion of regional investment targeting at overseas NPS offices as well as a reduction in the proportion of local stocks in the LP's mid-to-long-term fund investment portfolio. As of March, NPS's cumulative investment return reached KRW241 trillion since its inception in 1988.

Rearrangement of the NPS portfolio has been interpreted as a reaction to slowing economic growth in Korea and deteriorating performances among the country's conglomerates as reduced Chinese demand hampers exports. Korea's economy advanced 0.5% during the March quarter, representing its slowest expansion since the third quarter of 2015.

The strategic pivot follows closely on the appointment of Myun-Wook Kang as NPS's chief investment officer and coincides with mounting concern around a possible over-dependence on government-linked fundraising in the domestic alternatives ecosystem. Earlier this year, the government moved to diversify domestic fundraising channels by allowing capital raised through public market offerings to contribute to PE vehicles.

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• Topics
• North Asia
• LPs
• South Korea
• National Pension Service (Korea)