Korea Post allocates $200m to global buyout funds

The group – which accounts for KRW 54tn ($50bn) of the approximate KRW 124tn Korea Post has in postal savings and insurance assets – has asked for proposals from private equity firms interested in participating. To qualify, firms must have primarily been involved in control deals since 2000.

Korea Post is willing to invest $120m in up to two funds in the mid-market space with a corpus no larger than $4bn and then $80m to one upper-mid-market manager that has a fund of $4bn or more. Funds with a more than 50% allocation to Asia and emerging markets will not be considered.

According to a disclosure, Korea Post is looking for an IRR of at least 7% and a multiple of 1.25x. It will pay a maximum of 2% in management fees and 20% in carried interest, subject to the fund reaching its hurdle rate.

Korean institutional investors are increasing their exposure to alternative assets because low policy interest rates have made fixed income less attractive. The CEO of Korea Post Insurance told an industry conference this week that its alternatives allocation is intended to reach 10% by 2020, up from the current level of 6%.

Earlier this year, Korea Post announced plans to commit $200m to funds offering global private equity co-investment exposure.

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