Military Mutual Aid Association’s Blind-Fund Competition Draws 2.5 Applicants per Slot; VIG Partners and Affirma Capital Enter the Race [fn Market Watch]

[Financial News] The Military Mutual Aid Association’s selection process for managers of this year’s domestic private equity (PE) and venture capital (VC) blind funds drew 2.5 applicants per slot. Despite reduced commitments and higher entry barriers, major firms flocked to the process, intensifying efforts to distinguish the strongest candidates from the rest.
According to investment banking (IB) industry sources on the 13th, the competition ratio for the Military Mutual Aid Association’s blind-fund commitment program this year was 2.5 to 1. VIG Partners and Affirma Capital were among the major participants. Presentations were also held recently for the applying general partners (GPs).
The Military Mutual Aid Association will select approximately 18 external managers this year for a total commitment of KRW 300 billion. It has allocated KRW 200 billion to PE and KRW 100 billion to VC. The PE allocation will be divided among approximately eight managers, with KRW 20 billion to KRW 30 billion committed per fund, while the VC allocation will go to approximately 10 managers, at around KRW 10 billion each.
The key focus of this year’s commitment program is considered to be “selection.” The PE allocation was reduced by KRW 140 billion, from KRW 340 billion last year to KRW 200 billion, while the number of selected GPs was cut from 10 to eight. The commitment per manager was also lowered from KRW 30 billion–KRW 40 billion to KRW 20 billion–KRW 30 billion.
At the same time, the entry barriers were raised. Applicants are now required to have managed at least one blind fund of the same type within the past five years, making it effectively difficult for new firms raising their first blind fund to enter. Applications are also restricted for managers that have used 60% or less of the committed capital in previously backed funds, as well as for firms that received sanctions equivalent to or more serious than an institutional warning within the past three years.
The decline in commitments does not mean that the association has less capacity to invest. The Military Mutual Aid Association established a PE co-investment fund worth approximately KRW 210 billion with KB Asset Management. The association committed KRW 200 billion, and at least 70% of the committed capital will be co-invested in domestic PE transactions pursued by GPs previously backed by the association. In other words, it reduced regular blind-fund commitments while expanding co-investments, in which it reviews individual transactions before deploying capital.
The association also has ample financial firepower. Its total assets stood at KRW 24.9433 trillion at the end of June, rising by an average of 16% annually since 2022. Operating profit for the first half was KRW 663.8 billion, while net profit was KRW 343.1 billion, up 22.6% and 52.9%, respectively, from the same period a year earlier. The overseas share of its investment assets also increased from 43.6% at the end of last year to 50.3% in the first half of this year.
The Military Mutual Aid Association is selectively pursuing infrastructure investments, including data centers and renewable energy, as well as high-quality commercial real estate. It is also pursuing corporate financing for AI, biotechnology, and healthcare companies.
An IB industry official said, “As the commitment size has decreased, competition is being concentrated among mid-sized and large firms with verified track records.”
[email protected] Kang Gu-gwi Reporter