Korea Post seeks to buy distressed securities worth a combined US$200 million, amid a series of aggressive overseas investments, the state-run agency said on Feb. 21.
The agency’s investment units, Postal Savings Service and Postal Insurance Service, will source US$100 million each to two private equity funds. Each fund seeks US$600 million commitment to buy high-yield securities in global markets, mostly in North America and other developed countries.
An official of Postal Savings Service told The Investor it has made a “timely decision,” refusing to comment on the reasons behind the purchase.
Korea Post will select two general partners of the funds -- with experience in managing distressed equity portfolio -- by April at the earliest. Proposals for the bid will be received until Feb. 28.
The fund’s portfolio will range from non-performing loans and junk bonds, among other types of distressed securities. Its maturity will be 10 years and its internal rate of return will be above 8 percent.
This will be the first such risk-bearing investment targeting overseas markets in four years, since its US$130 million investment in 2015.
The news came months after it pledged up to 200 billion won (US$177.70 million) funds for investing in domestic non-performing loans, which amount to some 40 percent of the entire fund. Eugene Asset Management and Pine Tree Investment & Management have been selected as managers of the domestic debt fund.
Korea Post has recently widened its presence in overseas alternative investments. Earlier in February, Postal Savings Service pledged a US$200 million investment in infrastructure development project abroad.
In August 2018, the agency picked US firm Global Infrastructure Partners and Canadian firm Brookfield Asset Management as the manager of a fund devoted to infrastructure investments, after investing US$400 million.
Korea Post’s total assets under management came to 123.19 trillion won as of the third quarter of 2018, according to the agency.
By Son Ji-hyoung (email@example.com)