Seoul-based IBK Securities has partnered with London-based Financial Risk Management (FRM) to set up a fund of hedge funds and distribute fund products in Korea.
Under the memorandum of understanding, IBK Securities will set up an offshore fund of hedge funds tentatively named the IBKS-FRM Fund of Funds. The FoHF platform is slated to go live later this year, with FRM as the investment manager.
The partnership will help IBK build its own expertise in the area of alternative investments, says Lee Hyung-Seung, chief executive of IBK Securities. The ultimate aim is to pioneer the establishment of a homegrown prime-broking industry.
This deal represents the first FoHF jointly launched by a Korean securities firm and a global asset manager. Until now, Korean securities companies have established funds in cooperation with a foreign asset manager, but never under a joint name.
The IBKS-FRM Fund will invest in multiple single hedge funds and, through portfolio and risk management, target steady returns with a low correlation to the market. The fund will be distributed only to qualified institutional investors.
FRM is an asset management group managing $9 billion of assets. Established in London in 1991, the firm became one of the first independent FoHF groups to open an office in Korea. Lee Chaejoo has been FRM's representative director since the office opened in 2008.
IBK Securities is a brokerage arm of Industrial Bank of Korea, one of three government-controlled banks in the country, along with Korea Development Bank and the Export-Import Bank of Korea.