Samsung Asset delays merger with hedge fund arm

Samsung Asset Management disclosed Sunday it has put a merger plan with its wholly owned hedge fund subsidiary on hold.

The Seoul-based asset manager that oversees 26.9 trillion won ($22.3 billion) assets -- largest in South Korea -- added it would make an announcement once the date of merger is rescheduled. The deal was initially set to be closed by Aug. 1, following regulatory approval.

The news comes amid intensifying scrutiny by authorities of Korean privately pooled funds -- private equity funds and hedge funds -- as a series of debacles surrounding registered hedge funds’ alleged scams built public distrust on the pooled funds.

The Financial Services Commission vowed earlier in July to inspect over 10,000 pooled funds created in Korea to prevent alleged frauds orchestrated by Lime Asset Management and Optimus Asset Management, among others.

Samsung Asset, which heavily invests in securities, announced on April 24 that it would tie up with Samsung Hedge Asset Management, founded in 2017.

The proposal was designed to cope with heated competition in the domestic private fund scene, which led to a decline in value of assets entrusted by investors, Samsung Asset said in April.

Under the plan, assets of Samsung Hedge Asset -- roughly 550 billion won -- were to be consigned to the parent Samsung Asset and sister Samsung Active Asset Management. Samsung Hedge Asset mainly invests in securities, derivatives and multi-asset strategies.

By Son Ji-hyoung (consnow@heraldcorp.com)