Yellow Umbrella, the mutual aid fund under Korea Federation of Small and Medium Business (KBIZ), has received 10 proposals in response to its request for proposals for private equity managers issued earlier this month, industry sources said on August 14.
Yellow Umbrella will select up to six managers to grant a total of 200 billion won ($169 million) in private equity mandates. It divided the selection process into two categories – competition open to all firms and competition open only to firms that have never worked with the pension fund before. The move is seen as an effort by Yellow Umbrella to diversify its private equity manager roster and give more opportunities to smaller firms, industry watchers said.
Among the firms applying are five managers that were awarded private equity mandates by the National Pension Service in June, according to sources. They included Glenwood Private Equity, Macquarie Korea Asset Management, SkyLake Investment, IMM Investment and JKL Partners.
“They all need to raise more capital for their new vehicles,” a source said. “Chances are high that some of these managers could also be chosen in Yellow Umbrella’s selection process because of their strong track record and large size.”
Another source said: “There are also some managers who decided not to submit proposals to Yellow Umbrella because they want to concentrate efforts on preparing proposals for Korea Post instead.” Korea Post last week issued a request for proposals to select two managers for private equity mandates worth a total 200 billion won.
Yellow Umbrella has approximately 11.8 trillion in assets under management at the end of 2019. It used to issue a request for proposals for private equity mandates annually. That changed this year. The fund began the selection process again four months after awarding total 60 billion-won mandates to three managers in April. They included LB Private Equity, Lindeman Asia Investment and KTB Private Equity. (Reporting by Byung-yoon Kim)