Boosting Offshore Operations

Woori Securities to set up hedge fund, offices in Indonesia, Malaysia, in addition to Vietnam, Singapore operations

Woori Investment & Securities Co. will make a daring move to set up and operate a hedge fund overseas next year, President Park Jong-soo said recently.
During a meeting with the media at the company's IB Center in Singapore, the CEO said the company will set up a hedge fund in December with a $100 million operating fund. The company will be the third hedge fund set up by a Korean securities firm after Shinyong Securities and Hana-Daehan Investment Securities.
Hana-Daehan Investment Securities plans to offer its HFG Korea No.1 to institutional investors and invest the fund in hedge funds, different from other hedge funds as it means reinvestment in other hedge funds. A hedge fund managed by Shinyong Securities is similar in nature to that of Hana-Daehan's in that they don't have direct control of their funds as they decided not to exercise the leverage technique or the long and short technique, traditional strategies used by hedge funds.
But, Park said, Woori Securities will operate the hedge fund directly and will be responsible for its performance results, adding that the company is on the lookout for qualified personnel to run the fund at the IB Center. He said the annual profit target will be from 20 to 25 percent on average.
The profit target is much higher than the 10 to 12 percent sought by HFG Korea No.1. Woori's hedge fund is to be invested in Southeast Asian countries, whereas HFG Korea No.1 is invested in Korean assets.
Woori Securities will invest $100 million as capital for its hedge fund, while Hana-Daehan will attract foreign investment in its hedge fund. Their long-term purpose for setting up hedge funds is the same: They will set up and manage the funds at their IB centers in Singapore and operate them as long as they can under the strategies to diversify their business lines as allowed by the Capital Markets Consolidation Act to be enforced from 2009, which removes the barriers dividing the financial industry and allows free competition and consolidation.
Park said next year the company will focus on the operation of the hedge fund and REIT business as it will be a critical period for the company's operations to be transformed as an investment bank, prior to the enforcement of the new capital market law in 2009.
In the meantime, Woori Securities moved a step forward in its strategy to expand its operations in Southeast Asia by opening a representative office in Ho Chi Minh City, Vietnam.
Park said at the opening ceremony that Woori will try to find investment opportunities in Vietnam and link them with Korean investors. The company will soon open representative offices in Indonesia and Malaysia as well.
Woori will search for unlisted companies in those countries and introduce them to Korean investors and also invest in the development of commercial and residential complexes, in addition to its participation in the projects for the development of new urban cities and resorts in the Southeast Asian region.
On Sept. 3, the company set up Woori Investment Asia Pte. Ltd., an IB center in Singapore, as its first step to becoming a representative Southeast Asian investment bank. The center will conduct IB businesses in cooperation with its offices in such countries as Vietnam, Indonesia, Malaysia and other countries in the region from next year.
The Singapore subsidiary is capitalized at $50 million with the aim of running a brokerage business centered around Singapore for Korean stocks, making investments in local companies, taking over non-performing loans and principle investment. The company also plans to sell Korean financial products to Southeast Asian investors to expand its revenue sources and to strengthen its relations with global investors.
Woori Securities aims to engage in a number of IB businesses, such as advisory and underwriting, through its center in Singapore, covering such countries as India and others in the region.
The company's second overseas project is the establishment of a research center in China by next year, which will be set up in Beijing to conduct global research and will be staffed by about 20 analysts recruited in China. The research center will conduct research on the Chinese economy and companies and provide the reports to its customers in Korea and around the world.
The center will eventually be expanded to become a global research center and conduct research on Korea, China and Japan and other countries in Asia. The company has decided to hold international conferences regularly to update international institutional investors with information on Korean businesses. The company has held the event nine times already since 2005 to give Korean listed companies the chances to inform major global investors of their operational conditions. nw

President Park Jong-soo of Woori Investment and Securities Co.