PE secondaries top Korean LPs' global PE funds list

Secondary private equity deals were picked as the preferred global PE investment of South Korea’s top asset owners, followed by co-investments and management buyouts, according to a recent survey by The Korea Economic Daily.

In the survey of 17 institutional investors, about half of the respondents said they will bulk up their global PE portfolios. None of those polled expressed an intention to cut exposure to that asset class.

To view individual responses, please see KED's Asset Owner Report. 

Among the respondents, which include the National Pension Service, the Government Employees Pension Service and the Korean Teachers’ Credit Union, 41.1% chose the secondary PE market as where they want to raise exposure the most.

Secondary PE transactions refer to buying and selling investor commitments to private equity funds before their expiration. Lured by double-digit returns, the NPS, Korea Post and other Korean institutional investors are piling into the market.

Co-investments and management buyouts came second and third on the list of favored PE funds, winning 29.4% and 23.5%, respectively. None of the respondents are inclined to decrease investments in the three PE types: secondaries, co-investments and management buyouts.

In a CIO panel session at the ASK Summit 2020 held in Seoul Oct. 28, Public Officials Benefit Association Chief Investment Officer Jang Dong-hun said the $12 billion pension fund will increase exposure to secondary PE and opportunistic funds next year. 

NPS is also planning to boost investments in secondary PE transactions, alongside private debt and hedge funds. In July, it announced a plan to create a private debt team and a secondary investment team under the existing private securities division.

HEALTHCARE, TECH AND ASIA

By region, Asia was picked as the best destination for PE investment, as was seen in the KED poll for private debt investment, conducted simultaneously.

By sector, healthcare and technology were at the top of the list, with blind pool funds chosen as the preferred PE vehicle.

Among the respondents, overseas private equity investments by 11 institutions average 1.4 trillion won ($1.3 billion), compared to their average alternative asset investments of 16.7 trillion won. The other six respondents declined to give details of their portfolio breakdown.

Write to Seon-Pyo Hong at rickey@hankyung.com
Yeonhee Kim edited this article.