Hedge Heat
The number of hedge fund firms in Korea is expected to increase from 21 to over 80 after the revision of the Financial Investment Services and Capital Markets Act in July, which lowered the minimum equity capital requirement applied to a private equity fund from 6 billion won (US$5 million) to 2 billion won (US$1.7 million), and allowed the establishment of such firms by registration instead of permission.
Even securities firms can handle private equity funds if they have an M&A record, and NH Investment & Securities, which is a combination of former NH Nonghyup Securities and Woori Investment & Securities, is preparing to release hedge funds.
According to industry sources, a total of 49 asset management firms and investment advisory service providers, have reported that they would handle such funds since the revision of the act. The companies include Samsung Securities, Mirae Asset, KB, Korea Investment Management, and Daishin Asset Management.
In addition, four securities investors, 19 real estate investors, seven special asset management firms and the like are expected to fill out the application by Oct. 24. A company that takes over KDB Daewoo Securities is likely to follow suit as well.
Hedge funds guarantee fund management fees and performance incentives about 10 times that of bond and stock funds. Under the circumstances, even a number of newly-established firms in the asset management industry are showing interest in the business, with the two-year business experience requirement repealed in the act.