Korea Scientists and Engineers Mutual-Aid Association (SEMA) is seeking managers to run a new 182 billion won ($153 million) private equity (PE) and venture capital (VC) allocation in its annual process of awarding alternatives mandates.
An announcement on the pension fund’s website on Wednesday (August 26) said proposals were due at 4 p.m. Seoul time on September 8, with the process to be followed by interviews and on-site due diligence of managers. Final selections are expected before the end of October.
Candidates will be screened on the basis of a quantitative assessment and then the shortlisted firms will be assessed on a qualitative basis. SEMA will consider such elements as an organization’s stability, its investment professionals, performance, risk management, decision-making procedures and investment strategies.
Four PE mandates worth a combined 100 billion won ($84.3 million) will be awarded, up from 70 billion won in 2019, and the proposed fund size must be 100 billion won or more. Managers with an active blind-pool fund can apply if the fund invested more than 70% of its committed capital. Co-managed funds are also allowed.
Up to 82 billion won ($69.2 million) has been allocated to VC, compared with 60 billion won in 2019, and seven mandates are expected to be issued. SEMA divided the VC selection process into two categories to let smaller firms compete separately with those of a similar size, which appears to be part of an effort by the pension fund to diversify its roster of alternative investment managers. The fund size should be at least 50 billion won for larger firms and 20 billion won for smaller firms.
SEMA will continue increasing its exposure to alternative assets, focusing particularly on distressed assets. “We plan to allocate more funds to special situation opportunities, especially in fixed income and alternatives investments,” chief investment officer Huh Sung-moo said during a press conference in July.
In 2019 the pension fund awarded PE mandates to Praxis Capital Partners, SG Private Equity and a consortium of Daishin Securities and SKS Private Equity. (Reporting by Ik-hwan Choi)