Suh Won Cheol (on screen), CIO of KBIZ-Korea Federation of SMEs’ savings arm speaks during a panel session at ASK 2024
South Korea’s major pension and savings funds see no drastic reshuffle to their portfolios tilted to private debts next year. But they are looking to raise exposure to private equity such as leveraged M&As in 2025, which are expected to gain steam from lower interest rates, said their chief investment officers and alternative investment heads.
“It’s time to look at other asset classes,” Suh Won Cheol, chief investment officer of KBIZ-Korea Federation of SMEs’ savings arm Yellow Umbrella Mutual Aid Fund, told a CIO panel session at the global investment conference ASK 2024 on Wednesday.
“Interest rate cuts will make it easier to finance M&As and corporate investments, where I believe investment opportunities will arise. The exit environment will improve,” said the former alternative investment head of the Government Employees Pension Service (GEPS).
Yellow Umbrella Mutual Aid Fund manges 25.7 trillion won ($19 billion) in assets, in which alternatives make up less than 10%.
Jun Beomsik, CIO of Teachers’ Pension, said the pension scheme for private school teachers and employees had focused on secondaries in both private debt and equity segments over the past two years.
“We did not invest in buyouts this year. But we will invest across buyout, venture capital and secondaries [for private equity] next year,” Jun told the session.
Pai Hongkyun, a corporate finance team of the Military Mutual Aid Association, speaks during a panel session at ASK 2024
The Military Mutual Aid Association (MMAA) recently commited some money to an M&A fund in anticipation of a rebound in the buyout market, said Pai Hongkyun, who leads a corporate finance team at the military fund. The MMAA manages 12 trillion won in assets.
Hanwha Life Insurance Co. and Kyobo Life Insurance Co. are interested in private equity deals, their investment managers said during the LP sessions. Hanwha will zero in on secondary, mid-market private equity deals, its CIO Shin Minsik noted.
MID-MARKET DEALS
The sovereign wealth fund Korea Investment Corporation, an active private equity investor, will remain focused on mid-cap deals, which would have more room for valuation growth than large-cap private equity, said its private equity head Yoon H. Huh.
By Yeonhee Kim
yhkim@hankyung.com
Jennifer Nicholson-Breen edited this article
