Shinhan Financial Group, one of Korea’s largest financial holding firms, has reached out to asset management companies that are well-versed in traditional assets in a move to bolster its asset management business, according to financial industry sources.
The financial group’s search for a new asset management firm is tied to the recent Lime scandal, a large-scale fraud in which Lime Asset Management is under investigation for allegedly misleading its investors by concealing losses and failing to meet redemption requests. Shinhan Bank and Shinhan Investment Corp were retailers of the now-frozen private funds raised by Lime Asset Management and Gen2 Partners worth 400 billion won ($332 million) and 500 billion won, respectively.
Shinhan Financial is determined to restore credibility and provide a wider range of options for customers by onboarding an asset management firm that will provide expertise in traditional assets such as overseas equities and bonds. This will also help to meet the demands of customers who want to invest in overseas traditional assets.
The newly acquired company will be an extension to the financial group’s asset management business alongside Shinhan BNP Paribas Asset Management, a joint venture with BNP Paribas, and the fifth-largest firm in Korea with approximately 66.2 trillion won of assets under management. Shinhan Financial holds a 65% stake in the joint venture.
“Shinhan Financial is aware that its affiliate banks and private banking sectors’ credibility are at risk. The group wants to strengthen its asset management business and expand its products such as public equity funds,” said a financial industry source.
The acquisition will also keep the group’s asset management arms ahead of firms trailing closely behind such as Korea Investment Management, Kiwoom Asset Management, NH-Amundi Asset Management, and more.
This is the first time in two years that Shinhan Financial has knocked on the doors of the M&A market. It purchased a real estate investment firm Asia Trust and insurer ING Life Insurance Korea (rebranded as Orange Life Insurance, Ltd) in 2018, but since then there has not been much activity due to its commitment to post-merger integration.
By Daehun Kim
<Edited by Danbee Lee>