Will KIC chief convince Blackstone to reopen Seoul office?

By Park Jae-hyuk

Blackstone Group reportedly hired a law firm recently to start the procedure of reopening its Seoul office by the end of this year, according to a media report and sources, Friday.

This came seven years after the U.S. private equity firm (PEF) closed its regional office here in 2014. Its local PR agency, Access Communications and Consulting, said Blackstone declined to comment on this matter.

Those familiar with the issue attributed Blackstone's highly probable return to Korea Investment Corp. (KIC) CEO Choi Hee-nam, who has made efforts to attract foreign financial companies to this country.

“He emphasized Korea's competitiveness in the alternative investment markets during a teleconference with Blackstone executives,” one of the sources said.

After being appointed the ambassador for financial cooperation last November, the head of the nation's sovereign wealth fund told The Korea Times that he was making efforts to convince global asset management companies running their Asia headquarters in Hong Kong to open their regional offices here.

“Some of them have shown interest in the Korean market with its large size of accumulated assets,” he said at that time. “Asset managers handling their investments in Korean businesses in Hong Kong will be enticed to enter the Korean market, if they discover more opportunities here.”

Blackstone has conducted its investments in the Korean market through its Hong Kong office after the closure of its Seoul office.

Senior Managing Director Ed Huang, who serves as the head of Greater China and Korea for his firm's private equity group, and Managing Director Eugene Cook, who focuses on investments across North Asia, have been regarded as the key decision-makers in Hong Kong, regarding Blackstone's investments in Korean companies.

Domestic institutions that invested in Blackstone's funds have therefore complained of difficulties in communication with the PEF.

KIC is among major investors in Blackstone's funds, along with the National Pension Service. As the amount of assets under management of the Korean institutions has grown, Blackstone has been highly expected in recent years to reopen its Seoul office.

In particular, the sovereign wealth fund gives extra points to foreign asset management companies with regional offices here, when selecting companies to entrust with its assets. The Financial Services Commission has supported such efforts to create a financial hub vision and increase jobs.

During a press conference earlier this month, the KIC chief also hinted at lowering its reliance on Blackstone by managing its assets directly and cooperating with local institutions, if the National Assembly passes the revision bill on the KIC Act.

In response, Blackstone reportedly told institutional investors that it will increase its investments in Korean businesses and real estate, after opening its Seoul office.

It has stayed out of large-scale investments here for the past two years, after its acquisitions of stakes in wholesale pharmaceutical and medical device distributor Geo-Young from Anchor Equity Partners and Starfield Hanam from Taubman Centers in 2019.

However, the PEF is raising its second Asia-focused fund worth $5 billion, which is expected to be used for its investments in Korea, Japan, Australia, China and India.