Hedge Fund Awards 2016

Hedge Fund Awards 2016 65 We invited Kyle Shin to provide us with an overview of the firm’s newest venture into credit investing. Gen2 Partners is one of the leaders in customised Asian Hedge Funds for Institutional Investors and Family Offices, in addition to being a trusted partner to help manage investors’ exposure to Asia across all alternative strategies in the region. Our investment team is highly experienced and work collaboratively with a network of industry contacts to support growth across our fund portfolio. As a company we have a Pan-Asian multi-asset strategy fund with flexibility across capital structures with a niche and focus on Korean corporates and investment grade credits, especially Asian bank capital. This move into Korean credit investing has resulted in fruitful results following our identification of an innova- tive point of entry into this market. We are able to offer a unique service to investors in Korea, because we are based in Hong Kong and are therefore not subject to Korea’s stringent investment regulations. These regulations, which I believe are inefficient, state that onshore credit investors cannot invest more than 20% in offshore foreign currency denominated Korean bonds in primary issuance. Therefore firms such as ours are able to offer Korean investors a solution to these regulations. This supports both our clients and our firm, as we now have a strong position in the premier offshore foreign currency denominated Korean bonds market in Hong Kong. Our Korean Credit Fund was launched in 2010 to work around these regulations, and has merely 4.2% mar- ket volatility, with a 2.2 sharp ratio. The fund invests exclusively in investment grade fixed income funds based in Asia, never working with high yield products in order to reduce risk. This fund has been one of the key drivers of the success of the Gen2 Group for the past six years. The reason for the success of our Korean investment strategy is because many international credit rating agencies do not understand the Korean financial market, and therefore they just apply their global ratings methodology to rat- ing all bonds. This means we are able to invest in in these poorly rated bonds and reap benefits accordingly. Additionally, a lot of Korean investors have to buy bonds in vast sizes as this is how Korean institutions work, but liquidity in the market means that it is not easy to do this, therefore I am able to buy bonds ahead of time and accumulate a store of these, which I then sell in one transaction. These approaches have been highly successful and have helped to drive growth in our business since the fund’s inception. In the last month the Korean government changed the regulations in the hedge fund market, allowing offshore firms such as mine to set up subsidiaries within the Korean market. Therefore moving forward I am keen to take advantage of these regulatory changes and directly access offshore Korean investors by creating a branch of the Gen2 Group in the region. We are currently in discussion with a major bank to set up the fund in Korea, and they will supply us with the capital we initially need for this venture. The new laws will make it much easier for us to achieve success in the Korean market, as they have lowered the bar and we are eager to take full advantage of this. There will be many other asset managers moving into Korea and this will provide us with new challenges, but overall these developments are very exciting and provide us with invigorating new opportunities. In addition we are planning to invest in one of the reputable asset investment firms in Korea, seeking to hold a 20% equity stake and become the second largest stake holder in the firm. Overall I believe that these develop- ments will make 2016 an exciting year for Gen2. Company: Gen2 Partners Limited Phone: 852 37274500 Fax: 852 3727 4545 Website: www.gen2ks.com