Koreans' fractional investing craze spreads to cows

Investment rights for dozens of Korean calves, worth a combined 10 million won ($7,900), sold out within one minute after each of the three investment windows opened on April 22.

Bancow, a crowdfunding platform for Korean live cattle, will use the investment money to breed 40 calves on local farms and share profits from the sale of the cattle in one or two years in proportion to their stakes.

In January of this year, the fractional investing platform attracted as much as 400 million won in its sixth-funding round within 39 minutes of the launch of the funding window.

Since its establishment in May 2021, Bancow has received a total of 2.6 trillion won in crowdfunding. Investors can participate in the funding with at least 40,000 won, equivalent to a 1% stake in a calf.

Its investors will be consistently informed of the rearing process and health conditions of the calf they have invested in until it is sold at auction, so that they can feel they are investing in "assets that grow."

Bancow said that its fractional investors earn an average return of 19.7% with an investment period of about two years.

Its popularity demonstrates the growing trend of fractional investing in both tangible and intangible assets ranging from music copyrights, artworks and luxury watches to buildings. But they have remained in the regulatory blind spot areas.

Just two days before Bancow launched its latest fundraising, the country's top financial regulator warned that the bulk of fractional investing platforms do not allow investors to directly hold physical assets used as collateral for their fractional ownership, nor enable them to exercise their rights as an investor.

The Financial Services Commission said last week that tradable fractional ownership of music copyrights should be categorized as investment securities under regulatory supervision.

The decision marked the first time for the country's authorities to define a type of intangible assets such as intellectual property rights. 

"Now that regulators have just taken their first step forward in relation to the fractional investing market, a cautious approach is needed," said a financial industry official.

Write to Nan-Sae Bin at binthere@hankyung.com
Yeonhee Kim edited this article