IGIS, KKR delay plan to set up Seoul-based real estate JV

IGIS Asset Management Co., the largest real estate investment firm in South Korea, and US private equity giant KKR & Co. have indefinitely postponed their plan to establish a Seoul-based joint venture, according to investment banking sources on Sunday.  

“Given current market conditions, we have decided that it is not the best time to establish a JV,” an IGIS official said.  

Market watchers speculate that IGIS has been pressured under the Financial Supervisory Service’s recent investigation of the Korean firm’s investments, focusing on real estate project financing (PF).    

IGIS has been preparing to spin off its value-add strategy unit to establish the JV, named IKR, since April of last year.

IGIS Investment Partners, wholly owned by the real estate firm, was set to transfer Shinhan Financial Investment headquarters or Namsan Square, respectively worth 740 billion won ($563.4 million) and 570 billion won, to the IKR’s underlying assets.

The Seoul-based real estate firm recruited compliance officers and management support staff last October, aiming for FSS accreditation in January of this year. While preparing for the new entity, IGIS joined the second round of bidding for the 15-story landmark Pangyo Alphadom Tower in January, where Samsung SRA was chosen as the final bidder.

But the plan for the JV foundation has been put on hold since February of this year as the FSS began inspections on IGIS’ investments, of which the results will come out around this July or August.

The financial regulator started investigations on local major real estate firms early this year, focusing on PF loans and liquidity as growing concerns over distressed real estate and short-term investments cloud the volatile banking sector.

Write to Sung-Jae Bae at ship@hankyung.com

Jihyun Kim edited this article.