Mid-sized PE firms likely to seek mandates from SEMA

South Korea’s mid-to large sized private equity (PE) firms are paying attention to Korea Scientists and Engineers Mutual-Aid Association (SEMA), which has increased its allocation to alternative assets compared to last year.

SEMA announced on its website on August 26 that it is seeking managers to run a new 182 billion won ($153 million) PE and venture capital (VC) allocation in its annual process of awarding alternatives mandates. Proposals are due before 4pm (Seoul time) September 8 and final selections are expected by the end of October.

Four PE mandates worth a combined 100 billion won will be awarded, up from 70 billion won in 2019. Last year, SEMA awarded PE mandates to Praxis Capital Partners, SG PE and a consortium of Daishin Securities and SKS PE.

Industry watchers expect at least three or four limited partners to continue seekings managers until the end of this year, including SEMA and Korea Post. Major domestic PE firms, which were chosen as managers by Korea Growth Investment Corp. (K-Growth) and the National Pension Service (NPS), are likely to keep applying to be awarded mandates by the limited partners.

Mid-sized PE firms such as JKL Partners, SkyLake Investment, IMM Investment and Glenwood PE are highly likely to participate in most of the planned contests until the end of this year.

JKL Partners which plans to finish fundraising for its fifth blind-pool fund, has already received approximately 350 billion won from K-Growth and NPS and was awarded a PE mandate of 20 billion won by the Pension Foundation of the General Assembly of the Presbyterian Church of Korea. It is expected to form an 800 billion won blind-pool fund by the end of this year.

SkyLake Investment started raising blind pool funds after being awarded a PE mandate by the Korea Teachers’ Credit Union (KTCU) in July 2019. After that, it was awarded a mandate by the Military Mutual Aid Association (MMAA), the Korea Teachers’ Pension, Korean Federation of Community Credit Cooperatives (KFCC), NPS and K-Growth. SkyLake Investment, which revised up its target fund size from 500 billion won, is expected to close its fundraising depending on the results of a selection.

IMM Investment, which is currently raising blind pool funds with a target size of 600 billion won, needs to raise additional capital as it was selected as a PE manager by NPS and the Pension Foundation of the General Assembly of the Presbyterian Church of Korea. The firm is expected to continue applying for more mandates until early 2021 to successfully create its blind-pool fund.

Glenwood PE and Dominus Investment are also expected to apply for SEMA’s annual process of awarding alternatives mandates. (Reporting by Ik-hwan Choi)