Speculation mounts over "imminent" sale of Korean asset manager

The sale of asset manager SEI Asset Korea is expected to be completed within days, with a number of domestic and international players believed to have expressed an interest.

Local sources say a deal is likely to be finalised by early April, with lead manager in the sale, Goldman Sachs, having gone through the process of accepting preliminary letters of intent. The business has been on the market for several months.

Those understood to have shown interest include Eastspring Asset Management (formerly PCA Asset Management), Kiwoom Asset Management (which is believed to have dropped its interest subsequently) and BNY Mellon.

Jamie Brookes, global head of asset management communications for BNY Mellon in London, declined to comment on market rumours linking the firm to the acquisition, but conceded: “Korea is an important market for BNY Mellon."

BNY Mellon has had an asset management rep office in Seoul since 2006, and had its application for a discretionary investment management licence approved by Korea’s Financial Services Commission in June 2010. This enables it to contract for discretionary investment management services with local financial institutions and professional investors.

Separately, BNY Mellon as a financial services company does have a branch office in Seoul with 60 employees, which it relocated just last month to the International Finance Centre in the city.

Meanwhile, a spokesperson for Eastspring Investments, which was recently rebranded in a global push, also told AsianInvestor it does not respond to market rumours or speculation.

Its Asia asset management business, which offers a range of onshore and offshore products, is headed by Graham Mason, a Prudenial veteran who has been with the group in senior fund management roles for 20 years. It has about $80 billion in assets under management and operates in 10 markets across the region, including Korea.

SEI Asset Korea manages about $7 billion in assets as at February 2012 and ranks 20th in AUM terms in the country’s domestic asset management industry, local media report.

The firm, which began operations in 1988, has three major shareholders: SEI Investments (56.1%), MetLife (34%), and IFC, a member of the World Bank (9.9%).

It is recognised for its value investing capabilities and serves a largely institutional rather than retail client base. As such, it is seen as a particularly attractive purchase for businesses with strong retail penetration already or those targeting institutional clients.

The forerunner to SEI Asset Korea began as a local advisory business in 1988, and eight years later was restructured under the title Asset Korea. SEI Investments took over the company in 1999 and renamed it, with Khwarg Thae Sun appointed chief executive. Khwarg declined to disclose the current status of the sale.

Two other businesses understood to be up for sale include ING Investment Management Korea – a 100% subsidiary of ING Insurance International with W27.3 billion ($24 million) in paid-up capital as of November 2009, according to its website – and Deutsche Asset Management Korea.

ING’s Asian investment management business managed about $55 billion across Japan, South Korea, Taiwan, China, Hong Kong, Malaysia and Thailand at the end of the fourth quarter last year, according to a company filing. It appointed Credit Swiss as sell-side adviser for the sale and has already sold its investment management business in the Philippines and Australia.

Meanwhile, Guggenheim Partners was named exclusive bidder for Deutsche Bank’s asset management business, as previously reported by AsianInvestor.

The businesses that were under review include DWS Americas, DB Advisors, Deutsche Insurance Asset Management and RREEF, the global alternative asset management business.

DB Advisors and RREEF, in particular, have Asian business which would be included in the sale, although the bulk of the assets come from US institutions. But it was understood that Deutsche would retain its Asian and European mutual fund businesses.

Separately, Hana Financial Group and UBS are set to start renegotiating the ownership structure of their joint-venture business, UBS-Hana Asset management. The initial agreement is up for review by the end of June. As things stand, UBS owns a majority 51% stake in the venture, with Hana Financial Group having 49%.

Further, Mirae Asset Global Investments is set to be merged with Mirae Asset MAPS Global Investments by the end of this month – sister subsidiaries owned by Mirae Financial Group). The merged entity would have more than $55 billion in AUM and a broader suite of fund products, including alternative investments, ETFs and real estate funds.