Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
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."
Regulators keep their eyes open on tightening insurance industry by introducing more detailed risk management requirements, which could bring pressure on smaller players.
China and India are more obvious choices for AustralianSuper to consider in Asia Pacific, but the super fund currently lacks the expertise and prefers to stick to the US and Europe.
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Investors are increasingly turning to private companies and private debt in their hunt for ESG alpha, but the age-old problem of transparency and due diligence remains