Kookmin Bank Also Suspends Private Equity Fund Redemptions: "Only Extending Maturity, Recovery Is Possible"

KB Kookmin Bank, First Redemption Suspension Case of Trade Finance Fund

[Asia Economy Reporter Park Sun-mi] KB Kookmin Bank, once considered a safe haven amid private equity fund scandals, could not avoid fund redemption suspensions. Problems arose with the trade finance private equity funds it sold due to the worsening of the novel coronavirus disease (COVID-19), making it impossible to redeem funds maturing at the end of this month.

On the 20th, KB Kookmin Bank announced that redemption of the ‘Barak Trade Finance Specialized Private Equity Fund No. 2,’ maturing at the end of this month, is impossible within the period. The fund size is approximately 17 billion KRW. The ‘Barak Trade Finance Specialized Private Equity Fund No. 1,’ with a size of 15 billion KRW maturing on October 28, is also impossible to redeem within the period.

Barak Trade Finance Specialized Private Equity Fund No. 2 is a fund of funds managed by ‘Barak,’ a London-based trade finance specialized private equity fund manager. Barak is the primary manager operating trade finance funds related to raw materials in South Africa, Kenya, Ghana, and other countries. To verify the operation status of the trade finance fund, which had increased risk due to COVID-19, Kookmin Bank, the fund distributor, conducted an on-site inspection of Barak last month. Subsequently, judging that the scheduled redemption could not be met, the bank notified customers who subscribed to the fund around mid-July.

The disruption in the redemption schedule is due to the impact on the trade industry caused by the prolonged COVID-19 pandemic. A Kookmin Bank official stated, "Due to the prolonged COVID-19 situation, many borders and ports have been closed, prohibiting container loading and unloading," adding, "As a result, trading companies are temporarily facing liquidity issues, but we believe redemption will be possible even if the schedule is slightly delayed."

Kookmin Bank expects the redemption timing for ‘Barak Trade Finance Specialized Private Equity Fund’ No. 1 and No. 2 to be around March next year. They are currently discussing related matters with the primary manager Barak and plan to finalize and notify customers of the specific redemption schedule by the end of this month.

A Kookmin Bank representative explained, "Although the recovery of investment funds has been delayed, it is not impossible. Since this is not related to fraud like other private equity fund incidents, there is no problem in recovering the investment funds." They added, "So far, the fund’s yield has been moving within ±5%, and sufficient reserves have been accumulated within the fund to absorb shocks without issues."

This content was produced with the assistance of AI translation services.