Korean investors look to private market strategies

The National Pension Service in Seoul, South Korea, reportedly committed 1 trillion won ($810 million) to hedge funds last year, including its first single manager hedge fund allocations. The pension system reported Marshall Wace in the U.K. and U.S.-based firms Crabel Capital Management, Pentwater Capital Management and Waterfall Asset Management in the fourth quarter of 2019. For NPS, the move into direct hedge fund investments was a big one, following its commitments to funds of hedge funds managed by BlackRock and GCM Grosvenor previously. Reportedly the system still has the room to increase its hedge fund allocations this year. Meanwhile in New York, DarcMatter announced this week the formal launch of DarcMatter Institutional Services to help alternatives managers access the South Korean capital markets. The fintech alternative investment platform has been active for more than five years, allowing global investors direct access to a universe of qualified alternative investment opportunities. Established in 2014, New York-based DarcMatter through its platform connects fund managers actively raising capital with investors globally, to seamlessly connect, access fund documentation, and invest in a curated set of hedge funds, private equity and venture capital funds efficiently online. Additionally, DarcMatter is leveraging blockchain technology to continue to accelerate further efficiencies in the asset management marketplace. In 2017, the firm expanded its support for investors within the South Korean market and opened an office in Seoul. "Early on we had realized the importance of the APAC region in the growth of the alternatives investment industry,” said Sang Lee, DarcMatter, president and CEO. “When we opened up our Seoul office, we further honed in on our focus to a market that we believe will be one of the fastest growing investor markets in the region.” Lee added that in order to enhance the capabilities of the firm’s technology offering, officials are offering a more customized approach to ultimately achieve the goal of better accessibility and transparency in global alternative investment markets. South Korean investors are increasingly looking toward a wider breadth of alternative investments. According to the Korea Financial Investment Association (KOFIA), the areas that remain strong and are continuing to grow include infrastructure, energy and real estate, as opposed to traditional investment routes. According to DarcMatter Institutional Services asset classes of interest in Korea are project finance, commercial real estate, private investment funds. Investors prefer managers with an excess of $1 billion in AUM, offering shorter duration investments (two to three years) and a firm aggregated track record of more than five years. Specifically, lower/mid-market direct lending strategies, infrastructure, commercial real estate and real assets are of interest.

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