Shinhan Financial Group will try to buy asset management companies to diversify its business portfolio after the Lime scandal, MoneyToday reported on Thursday (August 6).
Potential targets are Franklin Templeton Investment and TruStone Asset, which have strengths in the bond and stock markets respectively. Shinhan already has a strong position in stocks, alternative investments and REITs through subsidiaries Shinhan BNP Paribas Asset Management, Shinhan Alternative Investment Management and Shinhan REITs, and would have an opportunity to expand its portfolio to more traditional assets.
Shinhan was selected on July 29 as the preferred bidder for Neoplux, a venture capital subsidiary of Doosan Group, and is preparing for the final due diligence. Neoplux would be Shinhan Financial Group’s first venture capital affiliate, and could help the group to strengthen its non-banking sector. The targeted firm held 780 billion won (then $670 million) in total assets under its management as of late 2019, ranking between 10th and 20th in the venture capital industry.
“The group can make profits through investments to promising startups, bank loans and listings by acquiring a competent venture capital firm,” a Shinhan Financial Group official said. “The group is continuing to strengthen its non-banking sector due to high profitability.”
Shinhan Financial Group posted a net profit of 1.8 trillion won ($1.5 billion) in the first half of 2020, a better result than any other financial holdings company, though this was a 4.5% decline year-on-year. Net profit in the banking sector fell by 11%, but increased by 5% in the non-banking sector, which accounted for 38.4% of total net profit, up from 34.6% in the first half of 2019.
KB Financial Group did better than Shinhan Financial Group in the second quarter with earnings of 981.8 billion won ($841 million), largely due to a more than 60% surge in its securities. In contrast, Woori Financial Group, which relies heavily on banks, saw its first-half net profit plunge 44.01% to 660.5 billion won ($568 million).
Shinhan Financial Group is working to diversify and stabilize its fund portfolio in a bid to restore its market credibility after the recent Lime Asset Management scandal. Shinhan Financial Group and Lime were investigated after they were accused of covering up losses at Lime from its investments in assets controlled by U.S.-based International Investment Group.
Shinhan Investment, a subsidiary of Shinhan Financial Group, was one of the major sellers of problematic funds managed by Lime Asset Management, which led to investor losses as high as 1 trillion won. (Reporting by Hyewon Chang)