CLSA, Korean corporate launch $295m global co-invest fund

The fund is part of the Corporate Partnership Program introduced by NPS to support outbound investment by Korean companies. The initiative involves 12 domestic conglomerates that contribute half the capital, with the pension fund putting in the rest. A number of private equity firms are also participating.

The Nexen Global Fund was set up in association with Nexen Corp. and Nexen Tire Corp, which produce tires and related components. CLSACP will co-manage the vehicle alongside local player Calix Investment. They will source, execute and integrate investment opportunities that fall within Nexen's overseas strategic mandate. The company is interested in tire and automotive supply assets that will help boost its international presence.

Other private equity firms linked to the Corporate Partnership Program include MBK Partners, H&Q Asia Pacific, IMM Private Equity and Mirae Asset Private Equity. It has never been made clear exactly what function private equity will serve in the program. For example, in 2012 IMM invested in a water desalinization business in Spain with GS Grop via a corporate partnership structure. This appears to be distinct from the fund structure employed by CLSACP and Nexen.

Industry participants have previously warned that such partnerships only work if conflicts are properly addressed. "If a chaebol wants you to help it expand by acquiring overseas assets, the value might be accrued at corporate level at home, not in the subsidiary," Peter Whang, managing partner at Joshua Tree Asia Investments, told the AVCJ Korea Forum last year. "Chaebols also have longer strategic objectives than private equity investors."

However, NPS has formed dedicated partnerships with foreign private equity before, albeit without corporate participation. In 2011, the pension fund awarded an investment mandate to Standard Chartered Private Equity that was intended to facilitate overseas expansion by local companies.

That same year NPS also teamed up with Mirae Asset Private Equity and Korea Development Bank to support Fila Korea's acquisition of US-based Acushnet - owner of the Titleist golf equipment brand - for $1.23 billion.

CLSACP has approximately $2.6 billion under management and operates five other funds, including a mid-market pan-Asian vehicle, a Japan-dedicated fund, and three pan-Asian funds specifically targeting real estate, clean resources and shipping and logistics.

Nexen claims to have a more than 20% share of the domestic tire market as well as global network spanning 205 dealers in approximately 130 countries. It reported a net profit of KRW124 billion in 2013, up 7.2% year-on-year. Net sales came to KRW1.73 trillion, up from KRW1.71 trillion the previous year.

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• Topics
• Fundraising
• North Asia
• Industrials
• Co-investment
• CLSA Capital Partners
• South Korea
• manufacturing
• automobiles
• Fundraising
• National Pension Service (Korea)