[Asia Economy Reporter Minji Lee] Shinhan Financial Investment has decided to prepay 40% of the principal for the ‘Gentwo Fund,’ which caused a repurchase suspension incident worth a total of 1 trillion KRW.
According to Shinhan Financial Investment on the 28th, the board of directors held a meeting at 6 p.m. and approved a proposal to prepay 1,680 billion KRW, which is 40% of the 4,200 billion KRW investment, to investors of the ‘Gen2 Derivative Linked Securities (DLS) Trust.’ Although Shinhan Financial Investment plans to file a lawsuit against Gentwo Partners, it decided to provide part of the principal to customers first due to concerns that the litigation could be prolonged.
A company official explained, “The board decided on the prepayment to protect investors,” adding, “The Financial Consumer Protection Department will proceed with related measures aiming for payment within this year.”
The Gentwo Fund is a derivative linked securities (DLS) fund managed by Gentwo Partners and was sold domestically for about 1.0125 trillion KRW. Among these, the largest amount of 420 billion KRW was sold through Shinhan Financial Investment, followed by Samsung Securities with 145.1 billion KRW, Woori Bank with 34.7 billion KRW, Hana Bank with 30.1 billion KRW, and Korea Investment & Securities with 17.9 billion KRW.
Gentwo Partners is a Hong Kong-based asset management company operated by Korean national CEO Shin Ki-young. It mainly created bond-type funds and sold them primarily to corporations and institutional investors through domestic securities firms. Last year, as asset prices plunged due to COVID-19 and volatility increased, Gentwo Partners unilaterally notified sales agencies in July last year that the maturity of the maturing funds would be extended by one year. When the extended maturity date arrived in July this year, they notified that the repurchase suspension period would be further extended to July 2 of next year.
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