Quick, decisive and efficient
Mirae’s aggressiveness shines in time of caution and timidity
By Kim Tong-hyung
In the macho world that is the finance business, the quintessential image of the successful corporate leader has become similar to the stereotypical football coach: A tie-wearing hothead who barks out orders and runs a dictatorship in the boardroom.
And then there is Koo Jae-sang, the soft-spoken CEO and vice chairman of Mire Asset Global Investments, who could almost pass for a church minister. Well, rivals can confuse Koo’s meekness with weakness at their own peril. It could be said that the 48-year-old asset management expert is quiet as his company’s performance is loud.
Since the financial crisis hit and decimated stock markets around the world in 2008, financial services companies have been overcome by a sense of caution and timidity. But Mirae Asset Global Investments, a key unit of the Mirae Asset Financial Group, has been one of the few investment firms that have been embracing the risks, displaying boldness and decisiveness in attempting to find the gold trail buried in layers of adversity.
After recently completing its merger with Mirae Asset MAPS Global Investments, another group subsidiary, Mirae Asset Global Investments has now stepped up among the global heavyweights in the investment sector, managing assets worth around 62 trillion won (about $54 billion).
Mirae Asset MAPS had been involved in some key merger and acquisition (M&A) deals and investment activities had extended the group’s aggressive streak.
Mirae and Fila Korea led a consortium of buyers last year that acquired world-leading golf brands Titleist and FootJoy for $1.23 billion, brushing off challenges by Blackstone, an international power in asset management, and Adidas, the global sports equipment giant.
Mirae has also reaped impressive returns on several overseas projects, including a property investment scheme in Brazil, cementing its reputation as a financial player with international influence.
The absorbing of Mirae Asset MAPS comes at a time when Mirae Asset Global Investments is seeing its role quickly expand within the group that is showing pace and purpose in its efforts to become more global. While Koo expects to enjoy the bigger punch that comes with the bigger package, he stresses that his company won’t be getting any slower on its feet either.
One of the industry’s true investment gurus, Koo has shown impressive ability to detect opportunities faster than others, time his moves, and execute them with precision. It would be crucial for Mirae to maintain this combination of agility and skills, he says.
Obviously, these are difficult times for financial services companies and investors, but Koo wouldn’t have it any other way. The essence of investing has always been about finding ways to exploit the gap between pessimists and optimists, finding value in places where there’s supposed to be none and reap the rewards once the bandwagon becomes crowded.
This is an ability that will be put to test in subdued economic environments like the current one, and among the Korean investment firms, it’s hard to pick a player that plays this game better than Mirae.
When asked about what was the move of his life, Koo recalled Mirae’s massive investment in Korean shipbuilders around 2002 and 2003, when the elevation in international prices had repelled other investors from the sector. Koo saw upside in these struggling firms, anticipating that the higher fuel costs would reward them a window to make a killing through LNG carriers. His gamble worked out perfectly.
``I think we bought into Hyundai Heavy Industries when it was trading at 20,000 to 30,000 won per share. When we sold, the company was trading at around 500,000 won per share,’’ Koo said.
``We move in when we see true value and that was what we saw in the shipbuilders. We rarely invest in companies or projects where we can’t see ourselves committing for more than a year.’’
Finding diamonds in global rough
Mirae Asset Global Investments currently operates in 11 countries around the world aside of Korea ― U.S., Britain, Canada, China, Hong Kong, India, Indonesia, Taiwan, Vietnam, Australia and Brazil.
When asked whether Mirae finds a role model among other global investment firms, Koo said there is none because the company’s business model has evolved in a unique way.
``We expand network in emerging economies and wealth of experience there allows us to differentiate with any other asset-management firm on the planet,’’ he said.
``Our ability to a variety of products tailored to different type of assets, regions and countries is a critical part of our business model. We believe this will continue to be the core of our competitiveness from here now on and the goal is to establish ourselves as a true contender in emerging markets.’’
Last year was a meaningful period for Mirae’s aspirations to expand internationally. While the deals for Titleist and FootJoy hogged the headlines, the company quietly expanded its presence in financial services sectors, acquiring asset-management firms like Taiwan’s TLC and Canada’s Horizons Exchange Traded Funds.
Earlier this year, Mirae inked a contract to acquire Indonesian asset management firm NISP. And gaining a business license from the Chinese government to involve in the country’s asset management market is definitely a breakthrough for the company as well.
Currently, Mirae controls about 6 trillion won worth of assets in foreign countries, accounting for about 10 percent of its overall assets. Koo said the eventual goal is to achieve a 50:50 proportion between the company’s domestic and international business.
``The biggest reason we were able to thrive in through all the uncertainty that followed the financial crisis of 2008 was that we were able to diversify our business by aggressively expanding to global markets,’’ Koo said.
``We are now a lot more versatile, not only involving in our traditional business areas of stocks and bonds, but also earning our stripes in the business of investing in real estate and private equity funds (PEFs).
``Gaining permission from Beijing to jointly establish asset management vehicles with our global partners in the country will certainly be a breakthrough for us. The U.S. will obviously be a market where we will be watching things closely and we will be looking closely for M&A opportunities there.’’
It remains to be seen whether Mirae’s global savvy will provide a meaningful template for other Korean financial firms looking to expand their business tentacles overseas. Banking groups in particular have been scrambling to develop business models that work beyond Korean borders, with many of them looking to strengthen their presence in investment banking, as they face the prospects of a pullback in growth due to the saturation of the local market.
But Koo questioned whether the banks are deploying the right approach, stressing that globalization should be seen as a long-term strategy, not an attempt at finding a quick fix for the problems at hand.
``The potential for growth is limited when you’re working in just one country, so Korean financial companies looking to find a new energy for growth overseas is a natural process. The increased attention on investment banking is a positive development in this regard,’’ Koo said.
``However, it’s also true that Korean financial companies appear to have more weaknesses and strengths as they prepare to compete with global players. They can’t compete with established global investment banks in brute financial strength and their lack of international human networks and experience are also concerns.
``It’s crucial that the Korean banking groups are thinking long term. They can’t compete toe-to-toe with global leaders now, but this is a time to hone their skills and gain experience so they could do just that eventually.’’
The global financial industry is enduring a tough stretch, but Koo believes investors making the right kind of moves will eventually be rewarded for their patience.
``There is a heady mix of negatives affecting the global economy right now, including the eurozone debt crisis that is coping with fresh dangers, the fragile recovery in the United States, and the potential pullback in Chinese growth. However, the efforts by governments across the world to stoke their economies and improve liquidity have provided crucial help in restoring stability in financial markets, and we believe the U.S. will eventually regroup and drive the global economic recovery,’’ he said.
``However, it will take a little more time for the international efforts for policy coordination to fully take hold, so the global stock markets could enter a patch of temporary timidity. The efforts to defuse the crisis in Europe, including the injection of liquidity in Spain, improved profits of major U.S. companies like Apple, and the attempts to prevent a hard landing of the Chinese economy will eventually influence the market and drive its recovery.’’
Koo expected the Korean stock market to move in the direction of global trends in the coming months as the country’s economy remains heavily dependent on exports. However, a few blue-chip companies like Samsung Electronics, now one of the influential forces in the technology sector, appears to have entered a level where their edge in competitiveness makes them less vulnerable to macro-economic environments.
``Considering industrial competition with Japan and the dependence on Chinese market, the weakening value of the yen and subdued economic activity in China are immediate concerns for the Korean economy. However, Korea currently now has a lot more exporters across industries, compared to the past decade when its export engine was reliant on technology companies and carmakers, and the strengthening market positions of these firms are upping the growth potential of the economy,’’ he said.