Shinhan acquires Asia Trust

Shinhan Financial Group Chairman Cho Yong-byoung, left, and Asia Trust Vice Chairman Jung Seo-jin, shake hands after signing a stock purchase agreement at Bae, Kim and Lee (BKL), a law firm in southern Seoul, Wednesday. Courtesy of Shinhan Financial Group

Competition over REIT fiercer among financial institutions

By Lee Kyung-min

Shinhan Financial Group acquired Asia Trust, Korea's fifth-largest firm specializing in real estate investment trust (REIT) business, the group said Wednesday.

The acquisition of Asia Trust, which posted an annual net profit of 28.2 billion won ($24.8 million) and signed a total of 90 billion won in new contracts last year, is expected to fuel the high-yield business amid a booming real-estate market, further backed by a revised law to encourage competition, Oct 24.

According to the group, Shinhan's board meeting passed a motion to acquire 100 percent stake in the Asia Trust.

Sixty percent stake will be immediately acquired for 193.4 billion won, with specifics on purchasing the remaining 40 percent to be determined after 2022.

Soon after the board's green light, the group chairman Cho Yong-byoung and Asia Trust Vice Chairman Jung Seo-jin signed a sales and purchase agreement at Bae, Kim and Lee (BKL) a law firm in southern Seoul.

Cho said the acquisition will help the group become a leading financial group in the global REIT market, in line with the new company motto “Total Solution Provider,” under which development, rent and commercialization of real-estate will be offered in a close, tight coordination.

The group will fully capitalize on its assets, financing capability, marketing channels, firm customer base and strong brand recognition.

“I am very pleased about the successful acquisition of Asia Trust, one of the leading players in the industry with a top pool of talents,” Cho said in the statement.

“Shinhan will set a new paradigm whereby our experiences on financial business expansion and risk management will serve us as unique, unmatched business acumen.”

Shinhan is among many leading Korean financial heavyweights seeking to take an upper hand in the global REIT market.

NH Financial Group, the most active player in establishing a new REIT firm, introduced NH NongHyup REITs Management in July. Efforts are ongoing to establish another REIT arm exclusively for developing the nation's rural areas.

Woori Bank, which seeks to become a holding company by 2018, is also eyeing the REIT business as the bank's new growth engine.

Financial Services Commission (FSC) said Oct 24 that it will allow three more REIT firms to be established soon, a major change to the status quo where the market was open to only 11 firms since 2009.

According to a FSC study, the sector's net profit has tripled to 1 trillion won last year, a 21 percent on average over the past five years.

REIT refers to a company that owns, or in most cases operates, income-producing real estate ranging from apartments to various commercial buildings.