Shinhan Investment has received a request to delay K-pop related private equity fund redemption from a Hong Kong-based asset management firm due to underperformed entertainment business, according to industry sources on May 13.
The brokerage unit of the Shinhan Financial Group invested 20 million euros ($21.71 million) in Royal China International Asset Management’s K-pop Showbiz Asia Ⅱ Fund in April last year.
It was structured to earn profits from ticket sales by IME International that organized K-pop concerts in Hong Kong. The total value of the PEF came to 40 million euros.
Shinhan Investment headquarters in Seoul. (Shinhan Investment)
The fund’s maturity date was set on April 7, but Shinhan Investment was not able to receive its investment funds even after a month. Instead, the brokerage firm received a six-month maturity extension request from Royal China.
Hit by Hong Kong’s mass protests and coroanvirus outbreak, IME International failed to meet its profit demand from its planned concerts. The production agency then reinvested the ticket sales profits in another show, but it further incurred losses, the source said.
With the entertainment industry being hit hard by the pandemic, Shinhan Investment might lose its investment. However, the brokerage firm said that it will prevent investors’ losses by establishing security on the production agency’s assets, including stocks.
“There was no problem with the PEF, when we received a report from Royal China by the end of March. Currently, we’re reviewing what triggered the redemption delay,” a Shinhan Investment official said.
“When the K-pop fund was structured, IME International had guaranteed its payment. Once we receive a repayment plan from it, we’ll come up with effective countermeasures on the matter, such as by executing security.”
By Jie Ye-eun (firstname.lastname@example.org)