Hyunseung Lee: "From Capital Raising to Exit... The Virtuous Cycle Is the Core of 'Productive Finance'"

Interview with KOFIA Presidential Candidate
① Hyunseung Lee, Former CEO of KB Asset Management and SK Securities
Proposal to the Government: Three-Part Retirement Pension Innovation Package
"We Will Establish a Financial Investment Licensin

As the Candidate Recommendation Committee of the Korea Financial Investment Association has begun the process of soliciting applications for the ‘7th President of the Korea Financial Investment Association,’ Hyunseung Lee, former CEO of KB Asset Management, officially announced his candidacy last month.

In a recent interview with The Asia Business Daily, Lee stated, “The Association should not merely represent its member companies, but must function as an execution organization that truly supports their business and growth.” He declared, “I will transform the Association into a support hub for the growth of its members.”

"Speed is Competitiveness... We Will Establish a Licensing Support Center to Boost Market Responsiveness"

With ‘speed’ having become a key word in the capital market, Lee emphasized the need for a system that can respond immediately so that member companies do not miss growth opportunities due to administrative barriers such as licensing and regulations. He promised to establish a ‘Financial Investment Licensing Support Center’ (tentative name) within one month of taking office. The Licensing Support Center will consult on licensing procedures for each member company, provide standardized document templates, and analyze the latest regulatory and review trends to reduce risks for members.

He explained, “The growth of member companies is directly linked to the development of the capital market, and supporting this growth is the Association’s most important responsibility.” He added, “If member companies submit high-quality documents from the start, the review period is shortened and the burden on the authorities is reduced. The Association will serve as an intermediary platform, enhancing the efficiency of reviews and the speed of execution between administration and the market.”

Lee pointed out that, in a rapidly changing capital market environment, the Association’s response speed has not kept pace with the market. He expressed concern, saying, “Regulatory changes, global capital flows, and technological shifts are happening simultaneously. If the Association fails to provide timely support while member companies prepare for future-oriented businesses, the resulting gaps and losses will ultimately fall on the member companies.”

He diagnosed that “the greatest difficulty member companies face when pursuing new businesses is the complexity of licensing procedures and the uncertainty of the review process,” stressing the need for a dedicated organization to address these issues.

After discussions with CEOs of member companies, the following areas were identified as needing improvement: ▲inability to launch new businesses due to existing sanctions; ▲the registration system effectively operating like a licensing system; ▲lengthy licensing procedures and unclear requirements.

He noted, “There are not a few cases where past sanctions prevent companies from entering new businesses. Unreasonable linkage sanctions that block new business entry due to unrelated past sanctions are shackles that hinder innovation,” raising the need for improvement.

Hyunseung Lee, Chairman of LHS Asset Management, is being interviewed at the office set up in Park Tower, Yongsan-gu, Seoul on the 11th. Photo by Jinhyung Kang

Realizing 'Productive Finance' Through Retirement Pensions and Venture Capital

He also cited the need to urgently improve the retirement pension system. “Retirement pensions are a triple engine connecting the financial industry, the capital market, and the public’s post-retirement life, but this engine is not functioning properly right now,” he pointed out.

Lee explained, “Due to structural constraints and tax discrimination, returns are low, the inflow of long-term funds into the domestic capital market is limited, and over 80% of retirement pension assets are tied up in principal-guaranteed products.” He further noted, “The restriction on the proportion of risk assets in the default option system (currently 70%) also hinders the improvement of returns. The default option may be labeled as an investment product, but in reality, it has little effect on raising returns.”

Lee believes that raising the limit on risk asset allocation and simplifying the approval process for fund switching are essential to achieving investment returns that meet public expectations.

He also called for improvements to the ‘domestic reverse discrimination’ issue in the tax system. He explained, “Overseas equity products are tax-advantaged in pension accounts, but domestic equity products are actually disadvantaged. While capital gains from domestic equities are tax-exempt in regular accounts, they are taxed in pension accounts. Due to this irrational tax structure, the inflow of retirement pension funds into the domestic capital market is limited.” Lee’s view is that increasing retirement pension returns is essential to ensuring a stable retirement for the public and, at the same time, strengthening the capital market’s foundation.

To create a virtuous cycle linking pension, member company growth, and the enhancement of public wealth, he plans to propose to the government a ‘three-pronged retirement pension innovation package’ that includes: ▲rationalizing taxation of domestic equity products; ▲enhancing the effectiveness of the default option; and ▲expanding long-term investment in domestic equities.

Lee has also developed concrete plans to realize ‘productive finance.’ He stated, “Venture capital is not just a financial investment, but a key growth engine that can overcome structural challenges such as low growth and an aging population,” emphasizing the need for a ‘full-cycle design for venture capital’ covering everything from fundraising to investment and exit.

First, he argued that the current structure, which relies heavily on specific funding methods such as commercial paper and integrated investment accounts (IMA), should be improved. “We need to widen the channels of capital through a variety of sources, including securities finance, institutional investors, business development companies (BDC), and foreign capital. Expanding the range of operators for business development companies to include securities firms will also enhance fundraising capacity,” he suggested.

At the investment stage, he stressed the importance of not only providing capital but also strengthening due diligence capabilities and establishing a system for strategic support. “We must secure the capacity to properly analyze the business models of investee companies,” he proposed. He also urged that “after investment, comprehensive support should follow, connecting management, technology, and global expansion.”

He added, “Efficiently recovering investment capital is what returns capital to the market. This virtuous cycle is the core of ‘productive finance.’ Finance is ultimately an industry that invests in people, technology, and unknown possibilities. Along with institutional flexibility, a shift in social perception that respects entrepreneurship and innovation must occur simultaneously.”

At the end of the interview, Lee said, “The Association should not be a desk-bound administrative organization, but a platform that works alongside the market. I will be a president who connects member companies and the field as closely as possible.” He reiterated, “The success of member companies is the growth of the capital market itself. I will be a president who listens to the voices from the field most quickly and reflects them most realistically, ensuring immediate and effective communication.”