이 기사는 2020년 02월 25일 08:00 thebell 에 표출된 기사입니다.

An alternative investment program announced by Teachers’ Pension for the first time in more than a year has been met with lukewarm response from domestic PE firms.

Teachers’ Pension, a South Korean pension scheme for private school educators, announced earlier this month its investment program, in which it would pick three PE firms to commit a combined 150 billion.

The news was welcomed by PE managers at first, until they have been discouraged by strict requirements for application. According to the qualifications set by the pension fund, only PE firms that have won mandates from other domestic institutions and secured more than 30 percent of the target fund size of 300 billion won or more would be allowed to submit proposals.

But, at present, few domestic PE managers meet this qualification. That’s because – aside from the fact that there are a handful of firms on the fundraising trail with a 300 billion won target – most of them are nearing the final close of their funds, with many other institutions that implemented their selection process for the past few months already announcing the results.

For example, the Public Officials Benefit Association (POBA) recently committed 40 billion won each to MBK Partners, H&Q and SG PE. Among the three firms, SG PE is said to have closed its latest fundraising thereafter.

In January, the Government Employees Pension System (GEPS) announced that it would commit a combined 120 billion won to IMM PE, SG PE and Dominus Investment. The Construction Workers Mutual Aid Association (CWMA) also committed 25 billion won each to Stonebridge Capital and a consortium of Daishin PE and SKS PE in the same month.

Going back further, last summer, the National Pension Service (NPS) committed a total of 600 billion won to four firms – H&Q, Praxis Capital, VIG Partners and SG PE – which were working on raising capital for funds dedicated to mid-market deals. Last July, Korean Teachers' Credit Union (KTCU) also picked more than 10 external alternative managers, including SkyLake Investment, IMM PE, Unison Capital, STIC Investment, VIG Partners and Praxis Capital.

These firms are in their final stage of fundraising, while many of them – including VIG Partners, Praxis Capital and Unison Capital – reportedly have already closed their new funds. Given this situation, there are very few PE managers who are eligible to submit a proposal to Teachers’ Pension, industry watchers said.

“I gave up on the investment program of Teachers’ Pension right after I saw the requirements for application,” an industry insider said. “I thought it would be waste of time and efforts, because such strict qualification requirements could mean there are predetermined candidates.”

The move by Teachers’ Pension contrasts with the approach taken by Yellow Umbrella, the country’s mutual-aid association for small and mid-sized business owners under Korea Federation of Small and Medium-sized Businesses (KBIZ).

From this year, Yellow Umbrella plans to implement its alternative investment program twice a year, not just once, on a basis of a target fund size. It also removed the qualification that PE managers have a certain level of commitments from domestic institutions, allowing more PE firms planning to launch a new fund to submit proposals.

Yellow Umbrella is currently in the process of selecting three external alternative managers with a target fund size of less than 200 billion won. Those selected would receive a combined 60 billion won of commitments from the mutual-aid association, which is expected to announce the selection results next month.

(By reporter Han Hee-yeon)