This is the first installment of a series of interviews with South Korea’s leading investors and strategists, and analyses of their insights on markets and future investment. -- Ed.
Mirae Asset Financial Group Chairman Park Hyun-joo and his empire, one of South Korea’s largest asset management firms, were on a roller coaster ride last year as the group backed out of large acquisition deals and fought a series of lawsuits.
Just six months before the pandemic hit the global market, Mirae was gearing up for overseas outreach, sealing a landmark $5.8 billion deal to acquire 15 US hotels. Two months later, the financial giant’s 2.5 trillion won ($2.24 billion) consortium with local builder Hyundai Development Company was picked as the preferred bidder to acquire the cash-strapped Asiana Airlines. But then the pandemic started.
Under the coronavirus crisis the two deals, worth a combined $8 billion, soon became a major headache for Mirae and Park. The value of the hospitality and air transportation businesses nose-dived in the face of global lockdowns with no end in sight.
After many twists and turns last year, Mirae succeeded in stepping back from the deals without incurring major costs. In December, it won litigation against Chinese insurer Anbang (since renamed Daija) after Anbang failed to meet the conditions of the contract. The consortium for Asiana also ended, but Mirae escaped losses as it was set to inject its capital later on and its partner, Hyundai, covered the initial payment.
Now, as he passes through the tunnel, market eyes are on Park’s next move and whether he will be able to restore his reputation as the top investor in Korea after bets that turned out bad.
For now, Park’s title in Mirae is global investment strategy officer. He stepped down from a management post in 2018.
Since he cannot travel abroad, he appears to be spending most of his time here these days, meeting local business partners.
In a recent appearance on YouTube, the chairman expressed his interest in emerging segments, including logistics, data centers, semiconductors, cloud computing and electronic vehicles.
“In the long run, people should invest in innovative firms. Corporate competitiveness comes from innovation,” said the chairman in a video he made for retail investors earlier this year.
“The low-interest environment and ongoing digitalization are some of the factors that describe the current market. ... Those factors seem to attract new customers into the capital market and create new investment trends.”
Park has focused on startups that later grew into unicorns, whose value exceeds $1 billion -- or even decacorns valued at over $10 billion.
Didi Chuxing, a Chinese mobility platform company; DJI, a Chinese drone maker; and Grab, a car hailing service in Indonesia, are some of the startup unicorns that the Korean asset manager has invested in.
The Korean firm poured 300 billion won into the mobility platform company in April 2018, when the latter’s value stood at 63 trillion won. The Chinese mobility platform operator’s value is expected to nearly double to 112.5 trillion won when it makes its debut on the US stock market this year.
“Mirae Asset’s subsidiaries have been rolling out ETFs under the names of Mirae Asset Tiger, Global X and Horizons in those segments, and the chairman has been paying attention to those sectors as well,” a Mirae Asset executive close to the matter said.
Most recently the company said it had joined forces with tech giant LG Electronics to form a 100 billion won fund to invest in startups in the emerging EV, digital health care and data sectors.
Park is also focusing more on the domestic market.
The firm is currently running a project to build an ocean resort complex in Yeosu, South Jeolla Province, for 1.5 trillion won. The resort will house hotels, a water park, a shopping mall and a marina for yachts.
The development taking place in the south of the country, where Park was born and raised, is one of his marquee projects.
“Few companies may be able to make such a pledge to invest 1.5 trillion won to build the resort in the coastal city, located far from Seoul. It is aimed at helping vitalize the economy of a local community,” a spokesperson for the firm said.
The 62-year-old chairman started his financial career at Tongyang Securities, now Yuanta Securities, in 1986 and founded Mirae Asset in 1997 when the country was undergoing unprecedented economic restructuring that reshaped the local financial scene.
The salaryman-turned-investor introduced the nation’s first mutual fund under his name in 1998, built his empire riding on the rapid market growth and become an iconic figure in investment banking, earning the nickname “Korea’s Warren Buffett.”
Park’s Mirae Asset made its first overseas market entry in 2003 with an asset management unit in Hong Kong. Mirae now has 33 branches in 15 countries, including the US, Brazil and Vietnam.
Despite his massive success, Park has had his ups and downs -- his 4 trillion won fund targeting overseas markets plummeted with the collapse of the Chinese stock market in 2008. The 2019 deals also may have done serious harm not only to Park’s reputation but also to Mirae’s future, according to some observers.
The botched deals last year have reduced risks surrounding Mirae Asset, but questions remain over what Park has in mind, particularly at a time when the market in Asia’s fourth-largest economy is enjoying an unprecedented boom, with high liquidity and keen interest from retail investors.
Credit rating agency S&P Global, for instance, recently upgraded the long-term insurer rating of Mirae Asset Securities, a stockbroker under the financial group, from “negative” to “stable.”
“The outlook revision reflects our expectation that Mirae Asset will likely improve and maintain an adequate capital buffer over the next 18-24 months. This is based on our view that the company will have slower investment asset growth as it prioritizes risk management amid tighter regulatory monitoring on securities firms,” said the credit rating firm in a press release.
By Kim Young-won (firstname.lastname@example.org