NPS invests 27.5 tril. won in PEFs

The headquarters of National Pension Service (NPS) located in Jeonju, Jeolla Province. / Courtesy of NPS

By Anna J. Park

The National Pension Service (NPS), with assets under management (AUM) of over 830 trillion won ($710 billion), invested 27.5 trillion won in private equity funds (PRF) as of the end of last year.

According to a recent disclosure of the NPS's alternative investments, it invested 27.5 trillion won in 349 PEFs. This is the first time for the NPS to disclose the details of how much and where it has invested, and is part of it being more transparent about its investment operations.

The investment in PEFs is up 12.5 percent from the 24 trillion won recorded in 2020; and 271 of the PEFs are blind-pool funds, meaning that investment is based on a particular firm, and the money is managed by a general partner having a broad discretion about investment decisions.

Buyout funds, aimed at acquiring management rights, accounted for more than 56 percent of the PEF investments, followed by 10.3 percent for mezzanine funds, 7.5 percent in distressed securities, 5.3 percent in secondary funds and 4.9 percent as venture capital.

By region, about 9.2 trillion won was invested domestically, while 6 trillion won went to North America, 3 trillion won to Europe and 1.6 trillion won to Asia.

Carlyle was the most opted for PEF firm with the NPS investing 1.26 trillion won in eight of its global funds, followed by KKR with 1.07 trillion won invested in nine global funds.

The NPS invested 849 billion won in four funds from Blackstone, followed by 663 billion won in four Silver Lake funds, 449 billion won in four funds from Europe-based Permira, 442 billion won in CVC Capital, and 362 billion won in TPG's seven funds

Among local PEF companies, STIC Investments drew the largest investment at 712 billion won in four funds. Another big-name PEF firm IMM attracted 486 billion won in five funds, followed by 345 billion won in VIG Partner's three funds, 286 billion won in SkyLake's three funds and 88.3 billion won in MBK Partners' two funds

Market insiders say due to Covid-19, the NPS is tending to select big-named PEF firms, rather than choosing new firms after closely reviewing their funds, as it is harder to visit and check on companies on site.

In total, the NPS invested 83.39 trillion won in alternative assets, including PEFs, real estate and infrastructure as of the end of last year. In real estate, the NPS invested 29 trillion won in 190 funds, with about 42.2 percent going to North America, followed by 22.7 percent to Asia and 20.9 percent, Europe. The pension operator invested 24.1 trillion won in infrastructure through 185 funds, and 1.8 trillion won with hedge funds.