About us
(Seoul=Yonhap Infomax) Yong Bi Yang = The collapse of Lehman Brothers in 2008, which sent shockwaves through global financial markets, led to tighter banking regulations. With the implementation of international standards such as Basel III, banks faced increased capital requirements for middle-market lending.
As a result, banks began to gradually exit the middle-market lending space, where capital burdens outweighed profitability for loans to mid-sized and small businesses. The void left by banks in middle-market lending was filled by private debt funds.
Rising demand for alternative investments among major institutional investors also contributed to the rise of private debt. In a prolonged low-interest-rate environment, pension funds and insurers sought alternatives to traditional bonds and public equities.
Pioneers such as Benefit Street Partners (BSP), a leader in US private debt, and Alcentra, a major player in the European credit market, have driven the growth of the US private debt market and the expansion of the European high-yield and collateralized loan obligation (CLO) markets.
Following the global financial crisis, BSP and Alcentra emerged as key players and were acquired by global alternative asset manager Franklin Templeton in 2019 and 2022, respectively. The combined BSP-Alcentra platform has since established itself as a leading global private credit house, spanning the US and Europe.
The BSP-Alcentra platform manages $90 billion out of Franklin Templeton's $260 billion in alternative assets, investing in North American and European middle-market opportunities. In Korean won terms, this represents over 130 trillion won in assets under management.
In South Korea, major institutional investors have been allocating capital to Franklin Templeton's alternative investment division, including BSP-Alcentra. Over the past decade, approximately 33 limited partners (LPs) have entrusted funds to BSP-Alcentra under the Franklin Templeton umbrella.
A Korean national plays a key role in bridging capital from the Asia-Pacific (APAC) region, including South Korea, to the platform. Kim Jeong-min, who joined BSP-Alcentra in 2023 as Head of APAC Sales, oversees fundraising across the region.
He explained, "We are raising capital from Korea, Japan, and the Middle East to form North American middle-market private debt funds, with Korea being the most important market."
From Bank Investment Banking to Global Alternative Asset Manager
Born in 1984, Kim began his career as a banker in South Korea. After earning a bachelor's degree in finance from the University of Wisconsin and a master's in statistics from Columbia University, he joined Woori Bank's M&A team in 2012, where he was first exposed to private equity.
In 2016, Kim moved to the National Pension Service (NPS), where he managed North American private equity funds and gained experience as an LP, developing various strategies for US private investments.
Kim's connection to BSP-Alcentra began after leaving NPS for Campbell Lutyens, an agency that connects investors and asset managers, where BSP was a client.
"When BSP was acquiring Alcentra, I was invited to help set up the APAC team and became the first member," Kim said. "We are now headquartered in Singapore and raising capital from investors across Asia."
Deal Sourcing and Loss Minimization Key to US Middle Market Focus
BSP-Alcentra specializes in private debt, known for its attractive risk-return profile. The firm prioritizes capital preservation over maximizing returns, as its funds track market interest rates.
Kim highlighted "deal selection" and "loss control" as the core of BSP-Alcentra's investment philosophy. The firm maintains rigorous risk management, with a default rate of 1%, compared to the private debt market average of 2%.
"Even in the event of defaults, we recover over 90% of principal," Kim emphasized. "Over the past 17 years, our annual loss rate has averaged just 3 basis points."
As one of the longest-standing managers in the private debt market, BSP-Alcentra has consistently delivered stable returns. While private equity funds aim to maximize returns through equity investments, private debt funds generate income primarily from interest, offering greater stability.
"Our base expected return is 8-10%, but with leverage, we target 11-13%," Kim said. "BSP-Alcentra is among the oldest players investing in the US middle market."
With traditional private equity funds facing lackluster returns and exit challenges in recent years, institutional investors are increasingly turning to private debt for its steady cash flow and portfolio diversification benefits.
Kim is raising capital from APAC, including Korea, for investments in the US middle market, targeting companies with enterprise values between 350 billion and 1.4 trillion won ($260 million to $1.04 billion), regardless of sector.
"Korea Is Over Five Years Ahead of Japan in Private Debt"
BSP-Alcentra views Korea as the most important market in APAC, which is why it was the first country in the region to receive dedicated personnel.
"While Middle Eastern capital is still dominated by oil money, Korea and Japan have relatively low allocations to alternative portfolios, leaving ample room for growth," Kim said. "Korea is more than five years ahead of Japan in the private market."
He added, "Alternative investments have been active in Korea since the mid-to-late 2010s, building over a decade of track record. This has led to accumulated know-how and increasingly sophisticated demands from institutions."
According to Kim, Korean LPs conduct more rigorous due diligence compared to their global peers, reflecting heightened concerns over private market risks.
BSP-Alcentra is positioned to offer tailored solutions to LPs, with two-thirds of its products ranking in the top 25% of benchmark performance.
"As a former LP myself, I focus on quickly understanding LPs' needs and delivering customized solutions in a timely manner," Kim said.
Expanding Beyond Private Debt to Real Estate, Special Situations, and CLOs
Kim aims to steadily increase the number of Korean LPs, currently at 33, by strengthening partnerships with pension funds, mutual aid associations, and insurers, as well as actively seeking new investors.
"Our flagship private debt funds are open for ongoing fundraising," he said. "We are also focusing on special situations and CLO products targeting North America and Europe."
In addition to private debt, BSP-Alcentra is currently raising a commercial real estate fund in Korea. Initially targeted at $1.5 billion, the fund was upsized to $1.8 billion due to oversubscription.
ybyang@yna.co.kr
(End)
Copyright © Yonhap Infomax Unauthorized reproduction and redistribution prohibited.