UPDATE 2-UBS to buy 51 pct of S.Korea's top asset manager http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&storyID=2006-07-27T084049Z_01_SEO34298_RTRIDST_0_FINANCIAL-KOREA-HANA-UPDATE-2.XML&rpc=66
Thu Jul 27, 2006
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By Rhee So-eui
SEOUL, July 27 (Reuters) - Swiss investment bank UBS AG (UBSN.VX: Quote, Profile, Research) will buy 51 percent of South Korea's top asset management company for up to $190 million to expand its wealth management business in Asia.
UBS is buying the stake in Daehan Investment Trust Management Co. Ltd., from Hana Financial Group's (086790.KS: Quote, Profile, Research) brokerage unit, UBS and Hana said in separate statements on Thursday.
Hana, in which Singapore's Temasek Holdings Pte. Ltd. [TEM.UL] and Goldman Sachs (GS.N: Quote, Profile, Research) are top shareholders with a combined 19 percent stake, had been in talks with UBS, Goldman Sachs and ABN AMRO (AAH.AS: Quote, Profile, Research) to sell the unit.
It was the latest effort by a global financial group to enter South Korea's asset management market, valued at some 200 trillion won ($210 billion). UBS said it will pay $158 million for the stake immediately and up to $31.6 million over three years in a so-called earn-out provision, which typically depends on how the business performs.
Daehan, which managed more than $20.5 billion as of June 30, would be run as a joint venture to be known as UBS Hana Asset Management Co. Ltd. The head of UBS' Asian asset management arm told Reuters in July that the bank's Asian business accounted for less than 10 percent of its funds under management globally. UBS Global Asset Management had total invested assets of $614 billion on March 31.
The deal, subject to South Korean regulatory approval, is expected to be completed in the third quarter.
Hana, South Korea's fourth-biggest financial services firm, last year bought brokerage Daehan Investment and Securities Co. and its asset management unit, Daehan Investment Trust Management, from the government for $473 million.
A surge of cash inflows into equity funds, led by retail investors, and changes to pension investment rules have triggered a race among domestic and foreign financial firms for a slice of the South Korean market.
In March, Credit Suisse (CSGN.VX: Quote, Profile, Research) agreed to buy a 30 percent stake in Woori Financial Group's (053000.KS: Quote, Profile, Research) asset management arm for $56 million.
Shares in Hana Financial closed 1.59 percent higher at 44,700 won following the news, compared with the wider market's <.KS11> 1.34 percent gain. ($1=952.1 Won)
(Additional reporting by Andrew Hurst in Zurich)
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