Tribridge to launch Korea fund in June

By Rafael Nam

HONG KONG (Reuters) - Tribridge Investment Partners will launch a Korea-focused hedge fund on June 1 with "at least" $10-20 million in initial funding to take advantage of deregulation plans for the country's capital markets.

The Hong Kong-based firm, which manages about $250 million, is also planning a $50-100 million fund for potential launch by year-end that would focus on Asian asset-based investments, such as asset-backed securities or real estate.

Tribridge's chief investment officer, Eugene Kim, told the Reuters Hedge Funds and Private Equity Summit in Hong Kong the fund is looking to capitalize on what it expects will be an unprecedented surge in distressed assets in the fourth quarter.

"Given our background as Koreans, we've always wanted to run a Korea fund," said Kim, a Korean-American who has been in Hong Kong for the past 10 years.

The fund, whose chief executive officer, Park Yuh-chung, is also of South Korean origin, will invest primarily in equities, although it will also hold exposure across other asset classes such as credit and foreign exchange.

"By having these other asset classes along with equity, we can control the beta (volatility relative to the market) much better, and performance should do significantly better than just a pure long-short fund," he added.

South Korea's parliament last year passed the Capital Markets Integration Act, commonly referred to as the "Big Bang", which will spur consolidation in the financial sector by breaking down barriers between broking, futures trading and asset management.

Along with the act, which is expected to be implemented next year, South Korea could remove restrictions on hedge funds, making it a more attractive destination for offshore funds as well as allowing their establishment in the country.

Tribridge will initially launch the Korean fund offshore, establishing a presence on the ground once rules are in place.

Though offshore hedge funds do currently operate in South Korea, a lack of regulatory framework, including limitations in shorting stocks, has hampered their activities.

Other hedge funds, including the country's top asset managers, are also thought to be keen to establish themselves in South Korea, especially with an eye on winning mandates from the nation's pension funds.

Analysts expect these pension services to deploy their money with hedge funds and other asset managers that can provide aggressive returns once the deregulation plans are implemented.

South Korea's National Pension Service, for example, currently has 220 trillion won ($226 billion) under management, of which 80 percent is in lower-yielding bonds.

Tribridge's planned entry to South Korea comes in a year in which global stocks have slumped -- with Seoul's main KOSPI .KS11 index down 10 percent in the first quarter -- amid worries about the U.S. economy and the global financial crisis.

"We recognize that right now investors are a bit shell shocked over what's happened," said Kim.  Continued...