South Korea’s Police Mutual Aid Association (PMAA) has started looking for a new chief investment officer to succeed Lee Do-yoon, with equity firms hopeful this will lead to a more expansive policy on the pension fund’s private equity allocations.
PMAA conducted the first interviews for Lee’s replacement recently and a final decision is likely by the board of trustees, the organization’s top decision-making body, before the end of the month, industry sources said on Wednesday (September 9), with the chief of the national police agency then giving approval. Lee’s term will expire in October.
PMAA has been conservative in building its private equity portfolio under Lee, whose investment philosophy — based on more than 15 years of experience in fixed income investing — appears to prioritize stability.
The pension fund had approximately 3 trillion won ($2.5 billion) in assets under management at the end of 2019, including a 35.3% exposure to fixed income. Investment in alternative assets accounted for 1.53 trillion won, or 51.1% of the total assets.
But 1.05 trillion won of the investment in alternative assets was put into sectors such as infrastructure and real estate, while private equity investment accounted for only 480 billion won, or 16% of the total assets.
The last time PMAA issued private equity mandates was in 2016, when it awarded mandates of 20 billion won each to SkyLake Investment and Dominus Investment. It has participated as a limited partner in two or three project funds every year for the last few years, but most of the capital commitments went to a handful of select managers, industry watchers said.
“PMAA is one of the largest asset owners in the country but has been considered less accessible to general partners like us because it does not prefer equity investment,” an official at one private equity firm said.
“If PMAA decides to divert more capital to private equity after the appointment of a new CIO, this would mean a broader pool of limited partners and that would be good news for us,” said an official at another private equity firm. (Reporting by Ik-hwan Choi)