South Korea’s Mirae Asset Global Investments likely bought Australia’s ETF Securities because it sees full control of a local firm as a key way to expand into the fast-growing exchange-traded fund market Down Under, according to market participants.
The move comes after the Korean manager sold its 60% stake in BetaShares, the third largest ETF manager in Australia, to US private equity fund manager TA Associates for an undisclosed sum in March 2021.
Mirae, Korea’s second largest ETF manager, earlier this month bought ETF Securities, Australia’s seventh largest ETF manager, also for an undisclosed sum.
It’s not clear why Mirae is reentering a market that it exited just 15 months ago.
A spokesperson for the company declined to provide an explanation when asked by Asia Asset Management (AAM) and would only point to the statement on the acquisition issued on June 15, which says the deal provides Mirae and its ETF unit Global X an opportunity to “add instant scale in the Australian market”.
According to Tim Murphy, director of manager selection, Asia Pacific at investment consultancy Morningstar Inc, the Australian ETF market’s growth potential still looks appealing to Mirae.
“The ETF marketplace is very competitive in Australia with five large players. There is definitely growth potential for Mirae Asset,” Murphy tells AAM. “Mirae Asset clearly identifies an opportunity how to enter the market in a way which gives it full control of how it operates in Australia.”
Figures from Morningstar show that Australia’s ETF assets grew 24% year-on-year to around A$118 billion (US$82.8 billion) in 2021. The top five ETF managers – Vanguard Group, iShares, BetaShares, VanEck, and State Street Global Advisors, all US firms – control more than 88.5% of the market.
Mirae’s general approach to enter new markets is through mergers and acquisitions, says Jackie Choy, director of Asia ETF at Morningstar.
“The advantage of this strategy is that it can leverage existing product distribution networks and resources to develop market penetration within a short period of time,” he says.
Mirae acquired New York-based Global X from JPMorgan Chase & Co in 2018 for an undisclosed sum.
According to a research analyst from investment consultancy Cerulli Associates, fund managers are keen to develop a footprint in the Australian asset management market.
“Australia is an important market in the Asia Pacific with a lot of growth potential with a large financial advisory network and huge national pension pool,” she says.
Sydney-based ETF Securities manages 21 ETFs with around A$4.7 billion of assets, equivalent to around 4% of overall ETF assets in Australia.
Mirae Asset Global Investments has around $218 billion of assets under management.
