Korea Post Insurance narrows $140 million global credit mandate to UBS and BlackRock; PGIM and Schroders miss out [fn Market Watch]

[Financial News] Korea Post Insurance has selected UBS and BlackRock as preliminary managers for overseas bond funds that will invest in a global credit strategy. It plans to entrust a total of $120 million to $140 million, investing $60 million to $70 million per manager.
According to investment banking (IB) industry sources on the 11th, UBS and BlackRock have been selected as preliminary managers for Korea Post Insurance’s overseas bond fund (global credit). Final selections are scheduled for December. The selected managers will remain in the pool for two years from the date of selection.
UBS and BlackRock had been competing for the mandate alongside PGIM and Schroders.
The investment will be made either through funds managed by overseas bond investment advisers selected by Korea Post Insurance or through offshore public funds managed by overseas asset managers. The evaluation benchmark is the Bloomberg Global Aggregate Credit Index (USD Hedged).
The offshore public funds were required to have at least $500 million in assets under management (AUM), while the total AUM for the strategy, including the proposed fund, had to be at least $1 billion. The asset manager’s total bond AUM also had to be at least $5 billion.
Portfolio management was also subject to requirements. The fund’s duration must be managed within plus or minus two years of the benchmark, and high-yield bonds are limited to less than 20% of net assets.
The first-stage quantitative evaluation was based on five years of performance, from July 2021 through June this year, allocating 70 points to investment performance and 30 points to factors such as management scale and operating period. The evaluation covered excess returns, returns relative to risk (IR), assets under management, management period and assets entrusted.
In the second-stage qualitative evaluation, the investment strategy received the highest allocation, at 35 points. The expertise of investment personnel received 25 points, risk management plans 20 points, and management stability and service quality 10 points each. Presentations of proposals and question-and-answer sessions were also included in the evaluation.
Meanwhile, Korea Post Savings recently selected CVC and Goldman Sachs as the two preferred bidders for mandates to manage blind funds investing in overseas infrastructure equity strategies (mid-cap). The total commitment is capped at $100 million. In light of this, Korea Post Savings is expected to invest €50 million in CVC (about KRW 75.4 billion). It plans to finalize the manager in December after conducting local due diligence and holding an investment committee review.
A source in the investment banking industry said, “Mandates from domestic institutional investors for global credit are attractive to global asset managers as a stable source of long-term capital,” adding, “This selection offers a glimpse of not only the competition among large asset managers but also the business rivalry to secure capital from domestic institutions.”

[email protected] Kang Gu-gwi Reporter