NPS brings Townsend backing to $1.3bn with Asia mandate

Korean state investor’s third mandate for the Cleveland investment and advisory firm is exclusively for Asian deals to supplement its own, bigger outlays.

The National Pension Service (NPS) of Korea has awarded a third, discretionary investment mandate to investment and advisory firm, The Townsend Group, bringing its total backing of the Cleveland-based outfit to $1.3 billion.

The mandate this time around is to deploy $400 million of equity into a variety of investment vehicles in Asia, including co-investments, joint ventures, clubs, secondary fund interests and primary commingled funds across the region, excluding Korea. Investments will be themed as either offering growth and/or dislocation.

The mandate, coming after a competitive tender process, sees Townsend continue a relationship with NPS that started in 2012 with the awarding of a $300 million mandate primarily for US properties. That was later increased with a further $500 million commitment. This latest mandate brings Townsend’s backing to $1.3 billion.

Anthony Frammartino, partner at Townsend, said in an announcement about the mandate: “Townsend is grateful for our collaborative, long-term relationship with NPS and their continued confidence in our global investment platform. We are also delighted to have been awarded this specialized investment mandate within a highly competitive process.”

“As a dynamic and evolving region, Asia offers a compelling investment opportunity to target both growth and dislocation, while leveraging the scale of our combined platforms. This program is tailored to the unique portfolio needs of NPS and will consider the entirety of Asia Pacific, ex-Korea, for investment.”

Nick Wong, Townsend’s partner in Asia, told PERE the mandate was a “customized solution designed to complement their existing program. They normally back big funds and so write large checks. This mandate will look at smaller deals and co-investments which require more of a local presence but also speed of execution. We are trying to help them implement that aspect of their portfolio.” 

Wong said that typical investments made by Townsend on behalf of NPS would range between $30 million and $80 million in size, smaller than the typical $100 million-plus outlays of the state investor, and the firm expects to generate returns in the core-plus to value-added range. The capital is expected to be deployed over a 12 to 18 month period.

The mandate brings Townsend’s discretionary capital in Asia to $1.4 billion. Added to the $5 billion of capital under advisement in the region, Townsend is expected to increase its staffing to meet its expanding responsibilities. The Asia team currently stands at six staff however, Wong said a further couple of hires could be added over the coming six to 12 months.