Korean teachers' fund to commit $495 mn to 10 PE firms

The Korean Teachers’ Credit Union (KTCU), a retirement fund operator for South Korean teachers, has picked 10 local private equity firms to run blind pools, backed by a total commitment of 700 billion won ($495 million), according to sources in the investment banking industry on Tuesday.

The selected PE firms include JKL Partners Inc., IMM Credit & Solutions Inc. (ICS), Praxis Capital Partners Co., H&Q Korea Partners Co., Premier Partners LLC, Genesis Private Equity, Eum Private Equity, LB Investment Inc., Daol Private Equity Ltd. and Korea Corporate Governance Improvement Fund (KCGI).

KTCU is expected to allocate between 40 billion won and 100 billion won per fund, depending on the outcome of final negotiations.  

Given that KTCU’s commitment to an individual fund must not exceed 25% of the total fund size, each of the selected PE firms will be required to raise at least 200 billion won within nine months of launching their respective funds.   

Each fund will have a five-year investment period and a lifespan of 10 years after its launch date.

The latest round of commitments by KTCU initially drew interest from around 40 local PE firms, thanks to its more flexible investment mandate.

The fund allows exposure to a wide range of strategies, including buyout, growth capital and credit investments, with minimal restrictions.

A BREAK IN THE STORM

The latest commitment by the teachers’ retirement fund is expected to bring a measure of relief to the Korean private equity industry, which has been beset by brewing controversies over their investment practices after MBK Partners’ wholly-owned Homeplus Co. unexpectedly filed for court protection in March.  

JKL Partners, one of the chosen general partners, is also under scrutiny by the Korean financial regulator for its management of Lotte Insurance Co., which it acquired in 2019.

Despite this, JKL Partners’ inclusion signals continued investor confidence in PEFs, boding well for the closing of JKL’s sixth blind pool, targeted at about 800 billion won.

Praxis Capital Partners is also nearing the final close of its fourth blind pool, estimated at 800 billion won, while Premier Partners completed the initial close of its latest fund in January, having raised around 840 billion won.

Currently, H&Q Korea is raising funds to close its fifth blind pool, targeting between 600 billion won and 700 billion won. This marks the firm’s first new fund since the launch of the fourth fund five years ago.  

ICS has already succeeded in attracting over 400 billion won for a new fund.

In 2024, KTCU achieved an 11.1% return on investments, with overseas portfolios in stocks, infrastructure and private equity and credit strongly outperforming domestic assets.

Its assets under management (AUM) grew by 16.3% on-year to 74.59 trillion won as of the end of 2024.  

It also reported a net profit of 7.2 trillion won last year, marking its 11th consecutive year in the black. 

Write to Jun-Ho Cha at chacha@hankyung.com
Sookyung Seo edited this article.