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Shinhan Financial kicks off tailor-made fund with KKR

Banking group continues efforts to expand alternative investment capacity

Shinhan Financial Group said Thursday it has created a tailor-made fund worth $200 million with global private equity fund operator Kohlberg Kravis Roberts.

The move reflected Shinhan’s efforts to grow beyond the local market and promote its global alternative investment capacity down the road.

It also came in line with a memorandum of understanding on global alternative investment partnership that the two counterparts had signed in September 2018.

Shinhan Financial Group Chairman Cho Yong-byoung and KKR co-President Joseph Bae pose for photos after signing a partnership agreement on Sept. 21, 2018. (Shinhan Financial)
Shinhan Financial Group Chairman Cho Yong-byoung and KKR co-President Joseph Bae pose for photos after signing a partnership agreement on Sept. 21, 2018. (Shinhan Financial)


The latest fund, tailor-made exclusively for the Korean banking group, enables mutual communication, allowing both counterparts to discuss operating strategies at each stage of the investment, officials said.

“Unlike most conventional investments, Shinhan will be able to actively participate in decision-making procedures and thus directly embrace KKR’s global investment experience and knowledge.”

The fund consists of two pillar portfolios -- one focusing on KKR’s landmark PEF business and the other on real estate and infrastructure.

As part of the former, a fund worth $150 million has been launched through Shinhan Alternative Investment Management. The banking group is working on establishing some $50 million in additional funds to kick off the second portfolio, officials said.

Established in 1976, KKR runs business in 16 countries, with $194.7 billion in assets as of December 2018.

On the back of its overseas business and nonbanking sectors, Shinhan has been securing its leading position in the financial industry here, despite external challenges and prolonged low interest rates.

As of the third quarter of 2019, the group logged 2.9 trillion won ($2.5 billion) in accumulated net profit, up 9.6 percent from a year earlier. The corresponding figure for rival KB Financial was 2.78 trillion won.

“The tailor-made fund with KKR offers us a timely opportunity to improve our profitability in alternative investment,” said Chairman Cho Yong-byoung.

“We will continue to cooperate with global asset managers such as KKR”

By Bae Hyun-jung (tellme@heraldcorp.com)

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