Woori, Temasek to launch fund-of-hedge-funds

February 6, 2010
Singapore Democrats

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Kim Yeon-hee & Parvathy Ullatil


South Korea’s Woori Investment & Securities Co Ltd is set to launch a $30 million fund-of-hedge-funds with Temasek’s Fullerton Fund Management, as part of a restructuring of its hedge funds business.

The plan comes after Woori shut down a $60 million offshore hedge fund under its Singapore-based Woori Absolute Partners. A part of that money will be deployed to the new fund-of-hedge-funds.

A Woori spokesman confirmed the plan on Friday and said the company will sign a final contract with Temasek to set up the fund jointly.

“The move indicates change to our investment philosophy,” said another Woori official, who was not authorised to talk to the media. “Initially we had tried to do on our own but it was not easy. It took time to find partners.”

After winding-up the Woori Absolute Asia Multi-Strategy Fund, which has been in business since 2008, Woori will be left with one $35 million absolute return fund.

Woori, a unit of Woori Finance Holdings, is one of the few domestic brokerage firms that have forayed into offshore hedge funds to reduce their dependence on brokerage fees. South Korea has yet to allow the establishment of domestic hedge funds.

Fullerton, part of the Singaporean state investor Temasek Holdings, said last year that it expects to allocate more money to hedge funds as such funds offer greater downside protection relative to equities.

Separately, Woori Investment has pumped $20 million of seed capital into a hedge fund managed by Guan Ong, former chief investment officer of sovereign wealth fund Korea Investment Corp and plans to grow the fund size to more than $30 million, the Woori official added.