The Korean Teachers’ Credit Union (KTCU)’s private equity holdings in domestic and foreign markets have surpassed the 4 trillion-won mark for the first time.
The pension fund’s investment in private equity has grown almost 50% for the last two and a half years, from 2.86 trillion won at the end of 2018 to 4.22 trillion won ($3.55 billion) at the end of June this year, according to data from KTCU. The amount represents a 30% increase compared to a year earlier. Offshore investments in the asset class accounted for 1.9 trillion won or 45% of the total, with the remaining 2.32 trillion won invested in domestic private equity.
KTCU created a team dedicated to private equity investment in early 2018. The move was part of its efforts to diversify its portfolio away from traditional financial assets such as stocks and bonds as market volatility increased and interest rates remain at record lows.
“We began investing in private equity in the early 2000s but it was in 2017 that we started ramping up our investment in the asset class,” a KTCU official said. “We have continued to expand our investment in private equity for the past three years.”
The Covid-19 pandemic has slowed investment activity everywhere this year but the pension fund said it will continue to allocate more capital to private equity and diversify its manager roster.
KTCU participated in two of the largest buyout deals in 2018 – the acquisition of Toshiba Memory by a consortium led by Bain Capital and SK Telecom’s takeover of ADT Caps, investing a combined 600 billion won in the two deals. In 2019 the pension fund invested 600 billion won in a 1.2 trillion-won corporate partnership fund that was launched in partnership with SK Group. It also invested 200 billion won in Vietnam’s Vingroup earlier this year. (Reporting by Hye-ran Kim)