Key Takeaways
- • The National Pension Service (NPS) Fund Management Center has issued a request for proposal to select an external adviser for its overseas alternative investment delegated management, according to Chosunbiz citing the investment banking industry.
- • NPS's total fund size was about 1,458 trillion won at the end of last year, with alternatives accounting for roughly 16%, or 232 trillion won, and overseas real estate, infrastructure, and private investments alone exceeding 200 trillion won.
- • Bidders must have advisory track records of about $10 billion (roughly 13 trillion won) or more based on Preqin data, plus experience advising at least 10 institutional investors on fund recommendations.
- • The selected adviser will recommend delegated managers (GPs), conduct due diligence, and verify project structures, pricing, and financial models, effectively managing the manager pool.
- • Proposals are due April 6, followed by two days of presentation evaluations before final selection.
Summary
The National Pension Service Fund Management Center has sent out a request for proposal to select an external adviser to strengthen expertise in overseas alternative investment management, according to Chosunbiz, citing the investment banking industry. The move comes as alternatives, including global real estate, infrastructure and private equity funds (PEFs), expand rapidly within the portfolio, and is seen as an effort to reinforce investment verification and risk management.
The scale of the pension's alternative exposure underscores the rationale. At the end of last year, the NPS's total fund size was about 1,458 trillion won, of which alternatives accounted for about 16%, or 232 trillion won. Assets invested in overseas real estate, infrastructure and private investments alone are said to exceed 200 trillion won.
The NPS outsources most of its alternative investments to external managers. Unlike in Korea, overseas alternative investments are often made on an ad hoc commitment basis rather than through regular commitments, and target regions span Asia, Europe and North America. Alternative deals often range from hundreds of billions to trillions of won and feature complex structures, making the Fund Management Center's ability to review every opportunity and manager on its own limited.
Under the RFP, eligible firms must have advisory track records of about $10 billion (roughly 13 trillion won) or more based on Preqin data, and experience recommending fund candidates to at least 10 institutional investors. The selected adviser will support the overall manager selection process, including recommending GP candidates and conducting due diligence, while also reviewing investment feasibility, including project-level structure, price appropriateness and financial model verification.
The Fund Management Center plans to accept proposals through April 6, conduct two days of presentation evaluations and then select the final adviser. Industry sources expect the role of external advisers to grow as overseas alternative investments expand. Chosunbiz noted that global institutional investors, including Cambridge Associates, StepStone Group, Mercer and Willis Towers Watson, already provide alternative investment advisory services.
The scale of the pension's alternative exposure underscores the rationale. At the end of last year, the NPS's total fund size was about 1,458 trillion won, of which alternatives accounted for about 16%, or 232 trillion won. Assets invested in overseas real estate, infrastructure and private investments alone are said to exceed 200 trillion won.
The NPS outsources most of its alternative investments to external managers. Unlike in Korea, overseas alternative investments are often made on an ad hoc commitment basis rather than through regular commitments, and target regions span Asia, Europe and North America. Alternative deals often range from hundreds of billions to trillions of won and feature complex structures, making the Fund Management Center's ability to review every opportunity and manager on its own limited.
Under the RFP, eligible firms must have advisory track records of about $10 billion (roughly 13 trillion won) or more based on Preqin data, and experience recommending fund candidates to at least 10 institutional investors. The selected adviser will support the overall manager selection process, including recommending GP candidates and conducting due diligence, while also reviewing investment feasibility, including project-level structure, price appropriateness and financial model verification.
The Fund Management Center plans to accept proposals through April 6, conduct two days of presentation evaluations and then select the final adviser. Industry sources expect the role of external advisers to grow as overseas alternative investments expand. Chosunbiz noted that global institutional investors, including Cambridge Associates, StepStone Group, Mercer and Willis Towers Watson, already provide alternative investment advisory services.
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