Interview with Kim Sung-hwan, President of Korea Investment & Securities
On Next Year's 4 Trillion Won Target: "I Want to More Than Double It"
"We may become public enemy number one for the banks, but our investment base is set at a much higher level than bank interest rates. Immediately after launch, we have secured our year-end target of 1 trillion won in investment assets. Next year, I want to more than double that amount, not just reach 4 to 5 trillion won."
On December 18, at the Yeouido headquarters, Kim Sung-hwan, President of Korea Investment & Securities, introduced the country's first Integrated Investment Account (IMA) product and told reporters, "The IMA is not just a new product. It is an institutional mechanism that allows securities companies to raise funds in a long-term and stable manner and inject them into Korea's real economy and corporate finance."
Kim Sung-hwan, President of Korea Investment & Securities, is interviewed by reporters at the Yeouido headquarters on the morning of the 18th, when the country's first Integrated Investment Account (IMA) product was launched. Korea Investment & Securities
Korea Investment & Securities, which was jointly designated as the first IMA operator eight years after the system was introduced, unveiled its first product on this day-a closed-end, performance-based product with a two-year maturity. The IMA is a principal-guaranteed, performance-based product in which the securities company pools client deposits, invests them in corporate finance assets such as venture capital, and returns the performance to clients based on the investment results.
Kim stated, "The initial product will be managed with domestic acquisition finance and corporate loans as core assets, while enhancing profitability through high-yield assets such as Business Development Companies (BDCs). This is a timely task to develop Korea's capital market and supply venture capital."
The year-end target for the launch of the first IMA product has been set at 1 trillion won. The publicly announced goal is to supply at least an additional 4 trillion won by next year. However, Kim emphasized, "That is actually a modest figure; I want to more than double the 4 to 5 trillion won target next year." Regarding plans for the second and third products, he said, "They will be launched continuously, about once or twice a month." After the initial products are stably established, the company plans to gradually release mid- to long-term, growth-oriented products targeting customers with a more aggressive investment profile.
In this interview, Kim did not mention specific figures when asked about the expected returns that investors are most curious about, but he confidently stated, "The target return is not low. It is much higher than what banks offer." For the first product, the base yield is set at 4% per year. If returns exceed 4%, additional profits are split 60% to customers and 40% to Korea Investment & Securities. He added, "Our investment base is set at a much higher level than bank interest rates. With just 4%, the IMA is not viable. There needs to be a 'plus alpha' to cover our (Korea Investment & Securities') costs, profits, and additional benefits for customers."
The IMA business is structured so that more than 70% of the funds raised are allocated to corporate finance, in line with the institutional purpose of supplying venture capital and revitalizing corporate finance. When asked about industries and selection criteria, Kim said, "All corporate finance activities handled by our Investment Banking division will be included. The IMA Investment Review and Management Steering Committee (IMA RMSC) will only handle investments that have been thoroughly discussed and decided regarding industry, investment amount, duration, risk, and returns."
The allocation between overseas and domestic assets has not been finalized. Kim explained, "It would be ideal if most of the assets were domestic, but to achieve the target returns, we need to include global products to raise the baseline. However, it doesn't make sense to allocate half to global assets. Depending on returns, we may add more products as needed, or if returns are sufficient, we may not need to include them." He added, "We will maintain a 25% threshold for venture capital investment, and Korea Investment & Securities already has a company-wide venture capital ratio of over 25%." Venture capital investments are limited to domestic assets.
After the interview, Kim said he would immediately subscribe to the first product himself. Regarding competition for market share with Mirae Asset Securities, which was also designated as an IMA operator, he said, "What matters now is not market share competition, but establishing the system and earning customer trust. As the first operator, I believe it is important to play a leading role in productive finance."
He also reaffirmed his ambition to surpass Nomura Securities and become "Asia's top." He emphasized, "The IMA business will be a key pillar for Korea Investment & Securities to leap forward as a global investment bank. The IMA is not the end. We were the first in Korea to launch promissory notes and the IMA, but we will continue to strive for more firsts. That is what will help Korea Investment & Securities become number one in Asia."
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