Pennsylvania SERS diversifies alts portfolio with Korean commitment

Seoul-based Hahn & Company intends to use Fund II to take control of companies with a significant presence in Korea, according to a Pennsylvania SERS press release and the firm’s website.

South Korea’s reputation as a destination for foreign private equity firms to invest took a hit during Lone Star’s protracted battle with authorities over the sale of Korea Exchange Bank, according to reports. Lone Star finally exited Korea Exchange Bank by selling to Hana Financial Group in 2012 for $3.9 billion, six years after its first attempt to sell the bank in 2006.

In September, The Financial Times reported that many funds continue to struggle in their disposal of assets, despite a recent appeal for more foreign private equity investment from one of Korea’s top financial regulators, Shin Je-yoon.

Hahn & Company’s strength lies in its position as a domestic fund with “a lot of influence over there,” one market source told Buyouts, adding that many international firms struggled to grasp Korea’s investment culture.

On Oct. 14, Asian Venture Capital Journal reported that Hahn & Company held a first close on its $900 million target after roughly 10 weeks of marketing. Hahn & Company set a $1.2 billion hard cap for the fund.

Two Oct. 2 Form Ds filed with the U.S. Securities & Exchange Commission list Sang-Won Hahn and Pratish Patel as directors of Fund II.

The firm did not respond to a request for comment.

In addition to its allocation to Hahn & Company, Pennsylvania SERS’s $27.9 billion retirement system also approved up to $50 million for Insight Venture Partners’s ninth fund at its Oct. 29 meeting. Insight Ventures Partners IX is a growth equity vehicle earmarked for investments in software, software-enabled and Internet companies, according to a press release.

Insight Ventures closed its eighth fund on roughly $2.6 billion in 2013. Chief Financial Officer Mark Lessing, who handles investor relations for the firm, could not be reached for comment.

Both of the retirement system’s commitments remain subject to contract negotiations.

As of June 30, Pennsylvania SERS held $5.8 billion in exposure to alternative investments, which it defines as private equity, venture capital and special situation strategies. The retirement system was 0.9 percentage points above its 20 percent target allocation to alternatives as of the same date.