ING agrees Landmark acquisition in Korea
The deal has interesting parallels with ING Investment ManagementÆs 2006 acquisition of ABN Amro Asset ManagementÆs Taiwan business.
ING Investment Management has reached agreement with Morgan Stanley Investment ManagementÆs private-equity unit to buy 100% of Landmark Investment Management. The deal also involves taking minority stakes held by Landmark CEO Choi Hong and Kyobo Life Insurance.
This now gives ING IM three business lines in Korea: selling offshore products to domestic clients, managing some of the proprietary assets of ING LifeÆs Korea entity, and manufacturing domestic products for domestic investors û which ING IM had already begun under its own recently established but small onshore business.
Now this third leg will be given scale and credibility by incorporating the Landmark business, which before the sale was the 12th largest asset management in Korea with around W8.6 trillion of assets as of March. By integrating this with INGÆs existing onshore unit (which ING senior executives acknowledge itÆs really Landmark that will absorb the local ING business), the deal will put ING among the top 10 asset managers, with combined AUM of W13.2 trillion and a market share of 3.7%.
ôWe entered this deal not because our greenfield business wasnÆt working, but because this was a leap in scale,ö says Eddy Belmans, North Asia director at ING Investment Management in Hong Kong. ôThis puts us in the top 10 in one go and saves us three to five years of build-up. WeÆre now that much closer to our objective of being in the top five.ö
Choi will remain as CEO of the integrated firm, reporting to Belmans. Henk de Bruijne, who has served as CEO and CIO at ING Investment Management Korea, will stay on to help with integration. His longer term plans have yet to be worked out, but Chris Ryan, ING Investment ManagementÆs Asia-Pacific CEO in Hong Kong, notes that de Bruijne is a long-term employee who has led operations in several countries. ôBuilding the Korea business is a feather in his cap,ö Ryan adds.
This is the second such deal the firm has entered recently. Last year it acquired the onshore Taiwan funds business of ABN Amro Asset Management, adding scale to its existing business of managing local life insurance assets and selling foreign products to local investors.
In the Taiwan case, ING IM bought a local player with direct distribution and domestic asset classes (fixed income) that ING lacked. In Korea, there is no direct distribution for offshore products, itÆs all done through master agents. But Landmark brings a track record managing domestic products, as well as its bank and brokerage distribution links, which INGÆs fledgling onshore business doesnÆt have.
Another difference in the deals is that a business in Taiwan must be complete, with the fund manager responsible for fund accounting, client service and other back- and middle-office functions. In Korea, most of this is outsourced. This means integration issues are less complicated and concentrated on sales, marketing and investment management.
ING Group has other business lines in Korea, including ING Real Estate, ING Wholesale Banking, a 20% stake in KB Asset Management (majority owned by Kookmin Bank) and partnership with Kookmin Bank to operate ING Life Korea and KB Life.
This now gives ING IM three business lines in Korea: selling offshore products to domestic clients, managing some of the proprietary assets of ING LifeÆs Korea entity, and manufacturing domestic products for domestic investors û which ING IM had already begun under its own recently established but small onshore business.
Now this third leg will be given scale and credibility by incorporating the Landmark business, which before the sale was the 12th largest asset management in Korea with around W8.6 trillion of assets as of March. By integrating this with INGÆs existing onshore unit (which ING senior executives acknowledge itÆs really Landmark that will absorb the local ING business), the deal will put ING among the top 10 asset managers, with combined AUM of W13.2 trillion and a market share of 3.7%.
ôWe entered this deal not because our greenfield business wasnÆt working, but because this was a leap in scale,ö says Eddy Belmans, North Asia director at ING Investment Management in Hong Kong. ôThis puts us in the top 10 in one go and saves us three to five years of build-up. WeÆre now that much closer to our objective of being in the top five.ö
Choi will remain as CEO of the integrated firm, reporting to Belmans. Henk de Bruijne, who has served as CEO and CIO at ING Investment Management Korea, will stay on to help with integration. His longer term plans have yet to be worked out, but Chris Ryan, ING Investment ManagementÆs Asia-Pacific CEO in Hong Kong, notes that de Bruijne is a long-term employee who has led operations in several countries. ôBuilding the Korea business is a feather in his cap,ö Ryan adds.
This is the second such deal the firm has entered recently. Last year it acquired the onshore Taiwan funds business of ABN Amro Asset Management, adding scale to its existing business of managing local life insurance assets and selling foreign products to local investors.
In the Taiwan case, ING IM bought a local player with direct distribution and domestic asset classes (fixed income) that ING lacked. In Korea, there is no direct distribution for offshore products, itÆs all done through master agents. But Landmark brings a track record managing domestic products, as well as its bank and brokerage distribution links, which INGÆs fledgling onshore business doesnÆt have.
Another difference in the deals is that a business in Taiwan must be complete, with the fund manager responsible for fund accounting, client service and other back- and middle-office functions. In Korea, most of this is outsourced. This means integration issues are less complicated and concentrated on sales, marketing and investment management.
ING Group has other business lines in Korea, including ING Real Estate, ING Wholesale Banking, a 20% stake in KB Asset Management (majority owned by Kookmin Bank) and partnership with Kookmin Bank to operate ING Life Korea and KB Life.
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