이 기사는 2020년 05월 26일 08:00 thebell 에 표출된 기사입니다.

Competition to be selected as the National Pension Service (NPS)’ external private equity (PE) managers is expected to be fierce after the nation’s biggest public pension fund has removed all sub-categories this year.

The NPS has closed applications for external alternative managers for its private equity investments on April 29 and is currently reviewing the application documents, according to sources familiar with the situation on May 21.

The biggest public pension fund announced in March its plan to select external managers for an alternatives strategy in the domestic market. It plans to select PE and venture capital (VC) funds through competition in a specified period. The pension fund also plans to hire external managers for Corporate Partnership funds whenever their applications are received. It will allocate a combined 800 billion won ($644 million) to five PE firms.

Total 15 firms, around three times the number of available spots, submitted proposals to be selected as external PE managers. The competition among firms is likely to be fierce, considering the number of applicants to be hired as the NPS’ external large-cap managers is normally around twice the number of available spots.

Last year, there were two sub-categories under the PE strategy – mid-cap PE funds and special situation and distressed (SS&D) funds. A total of 10 PE firms submitted their applications for mid-cap PE managers, where four firms were expected to receive a combined 600 billion won. A total of six firms submitted their applications for SS&D funds, where a combined 400 billion won was planned to be committed to three firms.

In 2018, there were three sub-categories under the PE strategy – large cap, secondary and non-performing loan funds.

This year, however, the pension fund has removed all sub-categories, allowing applying firms to decide strategies of funds as well as the size of them within a range of 80 billion to 200 billion won. The move is seen to give external managers greater autonomy in preparing their proposals.

After the document screening process, the NPS will announce shortlisted candidates for the next round in early June, which will include due diligence and presentation competition.

(Reporting by Hee-yeon Han)