Friday, June 14th, 2013
SEOUL, KOREA - Major pension funds are entering the M&A financing market in droves. According to investment banking sources on June 11, the Korean Teachers Credit Union provided a loan of 50 billion won to MBK Partners when it acquired an outdoor brand NEPA in April. Lately KTCU is reported to be in negotiations for lending for the acquisition of ING Life.
Another large-scale pension fund Korea Teachers' Pension is also mulling an entrance into the acquisition financing market. The Public Officials Benefit Association has increased its lending volume since this year, including 60 billion won to MBK Partners for acquiring NEPA.
The reason pension funds are interested in the lending market has to do with the fact that they are having a hard time finding profitable investment outlets under the situation of low interest rates for years. The average rate of interest for corporate acquisition financing deals ranges from 5 to 6 percent. In the case of MBK Partners' takeover of NEPA, the pension funds were promised a guaranteed interest rate of 6.5 percent.
