Prudential Financial has bought two state-owned fund management companies in South Korea for about $300 million. They make the US insurer the largest foreign fund manager in the country, whose fund management industry has assets under management of US$127 billion.
Prudential paid Won 355.5 billion ($302 million) for Hyundai Investment and Securities Co and Hyundai Investment Trust Management Co. In return, the government will inject Won 2.2 trillion into the firms to re-capitalise them, and secure a veto over key decisions at the former Hyundai units.
Prudential will buy an initial 80 per cent stake in Hyundai Investment and Securities Co, but has an option to buy the rest between three and six years hence. The two fund managers jointly had Won 14.2 trillion in assets under management at the end of 2003 and a market share of 10.5 percent. After the transaction, Prudential plans to merge both former units of the Hyundai Group into a smaller asset management firm it had already acquired, creating the biggest fund manager in South Korea, which is the world’s twelfth largest asset management market.
Two other state-owned asset managers, Korea Investment & Securities Co and Daehan Investment & Securities Co, will be sold in the first half of this year.
The Prudential deal follows the recent purchase by Citigroup of KorAm Bank.