Korea Post issues fund-of-funds RFP

Jul 23, 2013

Korea Post's $27 billion insurance division is inviting local and global multi-strategy funds of hedge funds to bid for new mandates.

Korea Post’s insurance division has issued a request for proposal (RFP) seeking pitches from fund of hedge fund managers.

Both local and overseas funds of funds or financial institutions with a fund-of-fund offering are eligible for the mandate, although each applicant may submit a maximum of one fund. Managers in which Korea Post Insurance is already invested are not eligible, according to the RFP document.

The insurance division is only considering multi-strategy funds of funds, the prospectus notes. Other requirements include a minimum firm AUM of $2 billion and a minimum fund AUM of $500 million, as well as a five-year track record for both the firm and the fund (since June 2008). Annualised performance should be at least 5% over the past three years.

In terms of liquidity, firms considering pitching must offer quarterly redemptions or less – it will not consider firms with a hard lockup – and offer monthly NAV confirmation.

Seoul-based Korea Investment Management is acting as the $27 billion Postal Insurance Bureau’s sole alternative investments advisor.

The selection process involves an initial quantitative-screening evaluation, followed by an evaluation in the form of a presentation. Then comes a round of due diligence, before the final selection is made.

The RFP submission period ends at 5pm Korea time on August 9.

Required documents include four hard copies of the marketing materials about the manager and fund, in free-style format (English versions are allowed). Managers should also submit up to 10 pages of marketing materials in Korean, but only after the first evaluation process.

Previous hedge fund mandates awarded by Korea Post have been around $50 million each, with only one or two managers receiving allocations. Local market sources expect a similar outcome this time.

For enquiries about the RFP submission and process, candidates are asked to contact the global fund management department at Korea IM through Yang Bong-Jin at [email protected], Cho Hera at [email protected] or Hwang Jun-Yeon at [email protected]; or Korea Post’s Lee Jin-Ho at [email protected].

This RFP follows the issue of one late last year by Korea Post’s other arm, its $60 billion savings unit, to create a pool of hedge fund managers. Korea Post Savings Fund had said in July 2011 that it would be moving into alternative investments.