Macquarie Investment Management yesterday announced it had agreed to acquire ING Investment Management Korea from troubled ING Group.
The failure of ING Group to sell its Asian investment management franchise en masse last year forced it to divest businesses country by country.
That opened an opportunity for Macquarie, which has been keen to expand its presence in Korea since having sold Macquarie IMM Investment Management to Goldman Sachs in 2007. (Goldman exited the asset management business in Korea earlier this year.)
Assuming the deal is approved by regulators, the acquisition of ING IM Korea will make Macquarie the largest foreign asset manager in terms of AUM, the firm says. That includes two divisions, Macquarie Investment Management and Macquarie Infrastructure and Real Assets.
ING IM manages W25.2 trillion ($22 billion) in AUM, with extensive capabilities in fixed income and equities for retail and institutional clients – in particular, running bonds for Korean insurers. This was one aspect that appealed to Macquarie, which is boosting its insurance asset-management business.
Korea-based fund management executives say the industry has lost its lustre. The equities market is in bad shape, and that is what drives fees; retail investors continue to dump mutual funds in favour of exchange-traded funds; institutions squeeze fees to unprofitable levels and bank distributors eat the lion’s share of management fees. So why buy a full-service fund house like ING IM?
Macquarie’s announcement blandly says the acquisition boosts its Asia presence. Competitors in Korea say Macquarie will leverage ING IM’s client base to package global real-estate and infrastructure projects in a fund format, making such deals easier to sell to both institutional and retail investors in Korea. Then there is continuing interest in Korea (and elsewhere in Asia) to access opportunities in Europe thrown up by distressed governments and banks.
Rival asset management executives in Seoul believe Macquarie has done well out of the deal. They speculate that ING, once talks to sell its regional business to Ameriprise/Threadneedle fell apart last autumn, initially shopped its Korea business around for $100 million. They further speculate that the final deal would have probably netted only $60 million, based on its size and the woes afflicting the funds business in Korea in general – and on the fact that Macquarie is reputed to drive hard bargains.
Bankers associated with the deal declined to comment. Macquarie did not disclose any information regarding the terms of the deal. Due to the late hour of the announcement, AsianInvestor was unable to contact ING for this story.
Macquarie did say that Choi Hong, currently the CEO at ING IM Korea, will remain with the firm, as will his team. But it didn’t go into detail about Choi’s ultimate position within the new business.
Choi is a major figure in Korea’s asset-management industry. After a career in trading and M&A, he joined Mirae Asset in 1999 to run fixed income, and in 2002 became CEO of Landmark Investment Management, a business acquired by Morgan Stanley (with Choi and Kyobo Life Insurance also owning stakes). Landmark was then sold in its entirety to ING in 2007, and Choi went with it.
The outgoing Choi is also a bodybuilder, having in 2011 won the 6th Cool Guy contest organized by Men’s Health magazine, beating out 1,200 others, many of whom half his age.
Michael Walsh, who has served as project manager on all of Macquarie Investment Management’s acquisitions since 2008, will lead implementation of the transaction.