Hana Fin, CIC to set up $1 bn Korea-China cooperation fund

Hana Financial Group will set up a joint fund with China Investment Corp. (CIC) to invest in companies seeking to penetrate each other’s markets, with the fundraising size estimated at over 1 trillion won ($850 million).

Hana has made every effort to partner with the Chinese sovereign wealth fund which had launched a series of cooperation funds with leading financial services firms in the US, Europe and Japan, according to investment banking sources on July 16.

The South Korean banking giant is now fine-tuning details on the fund formation which will be the first of its kind to be launched between a Korean financial services firm and a foreign sovereign wealth fund.

Senior officials of CIC has met South Korea-based private equity funds including MBK Partners, IMM Private Equity and BlueRun Ventures during their recent Seoul visit to attract them as co-managers of the new joint fund.

They will draw investments from Korean institutional investors such as pension funds, retirement savings funds and insurance companies.

The fundraising size has yet to be determined, but is estimated to exceed 1 trillion won, according to the sources.

The cooperation fund will invest in Korean companies preparing to enter the Chinese market or expanding their Chinese business, as well as Chinese companies seeking to build their presence in Korea.

CIC, with $941 billion under management, is likely to serve as a co-manager and key limited partner.

From Hana Financial, its banking, credit card and life insurance units will join as limited partners, with brokerage arm Hana Financial investment taking a co-manager role.

In 2017 CIC launched a private equity fund with Goldman Sachs, called China-US Industrial Cooperation Partnership LP to help US companies penetrate the Chinese market.

The Chinese state-owned investment fund also agreed in late 2018 to jointly set up an investment fund with Japan’s Nomura Holdings.

The Nomura-CIC fund aimed to raise between $888 million and $1.7 billion from institutional investors in Japan and China, according to Nikkei Asian Review. It has drawn cash from Japan's three megabanks -- Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group -- as well as Daiwa Securities Group.

In Europe, CIC has launched similar funds with HSBC, BNP Paribas and Deutsche Bank.

By Chang Jae Yoo

yoocool@hankyung.com

(Photo: Getty Images Bank)