UBS next to enter Korea asset management
Days after GSAM acquires Macquarie-IMM, UBS Global Asset Management takes a majority stake in one of Korea's 'big three' investment-trust businesses.
UBS Global Asset Management has entered into a stock purchase agreement with Daehan Investment & Securities (DI&S) to acquire 51% of Daehan Investment Trust Management Company (Dimco), one of KoreaÆs largest asset management companies. Under the joint venture, Dimco will be known as UBS Hana Asset Management internationally, and as Hana UBS Asset Management in Korean. The transaction remains subject to regulatory approval.
UBS and Daehan have had a longstanding relationship, and the deal has been widely anticipated in the local market. Its announcement comes right on the heels of Goldman Sachs Asset Management's agreement to wholly acquire the $11 billion local fund venture Macquarie IMM Asset Management.
Dimco is a much bigger business, with W18.7 trillion ($20.3 billion) of assets under management. Along with the old funds businesses of Hyundai Securities (acquired by Prudential Financial) and Korea ITMC, it was once among the top-three largest fund operations.
Like the others, however, the investment trust business was run merely as an adjunct to the securities firm and its reputation was of a huge but cumbersome and bureaucratic dinosaur. Prudential's acquisition of Hyundai ITC initiated a reform effort to transform these big firms into autonomous, full-service fund managers while retaining the distribution platform of the old parent. Foreign firms such as Fidelity have become popular onshore, while a new breed of aggressive domestic players, including MiraeAsset, Landmark and, in areas such as passive and structured investments, Samsung ITC, have stolen the march on current investment trends. DI&S, which wholly owns Dimco (and is in turn wholly owned by Hana Financial Group) remains a formidable distribution machine.
UBS Global Asset Management will pay W150 billion ($162.2 million) plus a W30 billion ($32.4 million) earn-out for its stake immediately, subject to customary purchase price adjustment and to an earn-out claw back of up to W30 billion over the next three to five years. Goldman Sachs and Macquarie IMM did not reveal terms of their deal.
The joint venture will combine the international know-how of UBS Global Asset Management with the domestic expertise of Dimco. To that extent the two parties will work together to apply UBS standards in investment research, portfolio management, risk management, sales and marketing, operations, internal controls and compliance to the operation of the joint venture. Andreas Neuber, head of strategic projects for Asia Pacific at UBS Global Asset Management, has been designated chairman of the board of directors at UBS Hana Asset Management.
ôUBS Hana Asset Management will be one of the largest asset managers in the Korean market which represents an important source of new business for UBS," says John Fraser, London-based global CEO at UBS Global Asset Management. "In light of KoreaÆs strong underlying economic growth, continuing reform of the pensions market and the increasing sophistication of investors, we believe that the Korean asset management market offers very significant potential for growth and will be an increasingly attractive destination for foreign investment."
UBS and Daehan have had a longstanding relationship, and the deal has been widely anticipated in the local market. Its announcement comes right on the heels of Goldman Sachs Asset Management's agreement to wholly acquire the $11 billion local fund venture Macquarie IMM Asset Management.
Dimco is a much bigger business, with W18.7 trillion ($20.3 billion) of assets under management. Along with the old funds businesses of Hyundai Securities (acquired by Prudential Financial) and Korea ITMC, it was once among the top-three largest fund operations.
Like the others, however, the investment trust business was run merely as an adjunct to the securities firm and its reputation was of a huge but cumbersome and bureaucratic dinosaur. Prudential's acquisition of Hyundai ITC initiated a reform effort to transform these big firms into autonomous, full-service fund managers while retaining the distribution platform of the old parent. Foreign firms such as Fidelity have become popular onshore, while a new breed of aggressive domestic players, including MiraeAsset, Landmark and, in areas such as passive and structured investments, Samsung ITC, have stolen the march on current investment trends. DI&S, which wholly owns Dimco (and is in turn wholly owned by Hana Financial Group) remains a formidable distribution machine.
UBS Global Asset Management will pay W150 billion ($162.2 million) plus a W30 billion ($32.4 million) earn-out for its stake immediately, subject to customary purchase price adjustment and to an earn-out claw back of up to W30 billion over the next three to five years. Goldman Sachs and Macquarie IMM did not reveal terms of their deal.
The joint venture will combine the international know-how of UBS Global Asset Management with the domestic expertise of Dimco. To that extent the two parties will work together to apply UBS standards in investment research, portfolio management, risk management, sales and marketing, operations, internal controls and compliance to the operation of the joint venture. Andreas Neuber, head of strategic projects for Asia Pacific at UBS Global Asset Management, has been designated chairman of the board of directors at UBS Hana Asset Management.
ôUBS Hana Asset Management will be one of the largest asset managers in the Korean market which represents an important source of new business for UBS," says John Fraser, London-based global CEO at UBS Global Asset Management. "In light of KoreaÆs strong underlying economic growth, continuing reform of the pensions market and the increasing sophistication of investors, we believe that the Korean asset management market offers very significant potential for growth and will be an increasingly attractive destination for foreign investment."
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