NH Investment and Securities Co., the only large securities firm operating a hedge fund, plans to boost its 300 billion won fund to as much as 1 trillion won by next year, securities sources said on July 3. The securities firm is out to double the NH Absolute Return No. 1 PEF Fund from 300 billion won to 600 billion won, and if the return on the hedge fund reaches around 10 percent this year, the company will boost the fund to 1 trillion won by the end of next year through public attraction of investment, the sources said.
NH Investment & Securities Co. will pump more funds into private equity funds (PEFs) this year to further raise its investment returns. NH Investment & Securities has received handsome returns from its investments in PEFs for several years.
The company invested about 20 billion won into VIG Partners¡¯ No. 2 PEF, which successfully sold Burger King Korea. The brokerage firm received about 16 billion won in returns, including dividends of nearly 10 billion won, from its investment in the fund after VIG Partners sold Burger King Korea to Hong Kong-based private equity firm Affinity Equity Partners at 210 billion won, making twice its original investment over the three years.
With its wider investment, the brokerage firm will gain the upper hand in winning orders from M&A customers. The company stood out in the local M&A market last year as it successfully brokered a deal to sell HomePlus, the largest ever M&A deal in Korea, and other high-profile M&A deals such as Halla Visteon and Ssangyong Cement. A person familiar with the company said NH Investment & Securities has a strategy to leverage its investment into PEFs to expand its presence in acquisition finance offering and M&A advice.
NH Investment & Securities is also seeking to push through various overseas projects to diversify income sources in IB business. Recently, the company raised $320 million from Korean insurers and other institutional investors to lead a syndicated loan to Newark Energy Center¡¯s power plant project in New Jersey, in the U.S.
NH Investment & Securities is set to invest 700 billion won ($599.5 million) in Yeouido¡¯s Parc One multiple complex, according to sources familiar with the issue on July 11.
The firm recently reached an agreement with property developer Y22 Development Co. to buy a 56-story office building — one of the four buildings to be built within the complex. NH Investment & Securities will dip `vinto its own coffers for 200 billion won of the amount, while the rest will be funded by pension funds, asset managers and its own affiliates. NH said that instead of moving in, it would resell the building for bigger gains.
Once construction is completed in 2020, the 277-meter building will stand as the third tallest in Yeouido. Currently, the tallest is Office Tower I, followed by International Finance Center Seoul. The Parc One development project — estimated to cost around 2.5 trillion won — was initiated in 2007. But it was stalled since 2010 due to a lawsuit between the property-owner, Unification Church and Y22 Development.
The suit was settled in 2014, with the court ruling in favor of the developer. Y22 had sought to sell the buildings prior to its completion, but the Unification Church had rejected the idea, saying it was a violation of their contract.A new giant securities company is about to emerge in Korea, as NH Financial Holdings¡¯ acquisition of Woori Investment & Securities is being wrapped up. The new corporation is scheduled to be launched on Dec. 31, 2014. NH Financial Holdings is planning to grow the new company into a stock firm representative of Korea and leading its capital market. Once founded, NH Woori Investment & Securities became the largest securities company in Korea with an equity capital of four trillion won (US$3.9 billion).
A view of the NH I & S Co. head office building in Seoul.(Photos: NHI&S)