Korea's NPS allocates $605m to four local PE firms

VIG and Skylake, which fall into the large-cap investment category, will each receive KRW250 billion, according to local media. Lindemann and SG, meanwhile, which are expected to target mid-size investments, will receive KRW100 billion apiece. Commitments from NPS' venture fund program will be allocated at some point in July.

VIG - formerly known as Vogo Investment - is in the process of raising its third full fund, which has a target of $500-600 million. In April, it made the last investment from Fund II, buying a majority stake in parking management business HiParking for KRW27 billion. VIG agreed the first full exit from the same fund in February, with the sale of the Burger King master franchise for Korea to Affinity Equity Partners.

Skylake is led by Dr. Daeje Chin, who previously served as CEO of Samsung Electronics and held a government post as Korea's minister for information and communication. It invests in high growth businesses across the information, communications and technology space. The firm is said to be in talks to buy the Korea franchise for Australian-themed US restaurant chain Outback Steakhouse.

Alternatives accounted for 10.7% - or KRW54.7 trillion - of NPS' overall portfolio at the end of 2015, up from 9.9% the previous year. Of this, 60% is in foreign investments. The private equity allocation in the global portfolio increased to KRW9.1 trillion from KRW7.28 trillion in 2014, but real estate remains the largest component with KRW15.5 trillion. The remaining KRW7.7 trillion is in infrastructure.

NPS' domestic portfolio is categorized as KRW5.7 trillion in real estate, KRW8.4 trillion in infrastructure and KRW8.2 trillion in other assets, including private equity. The pension fund has relationships with a host of domestic private equity GPs, with Lindemann, Skylake, SC and VIG all listed among the existing commitments as of the first quarter of 2016.

As of late 2015, NPS had KRW512.3 trillion in overall assets, up from KRW470 trillion in 2014. In addition to the KRW54.7 trillion alternatives portfolio, NPS had KRW164.8 trillion in equities, KRW292.2 trillion in fixed income, and a small amount in welfare programs.

NPS delivered a 4.6% return on its entire portfolio in 2015 and 4.7% on a five-year basis. Alternatives are the best performer by both measures, with 12.3% in 2015 and 9.1% over five years. NPS started its domestic alternative investment program in 2002 and first went offshore in 2005.

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