Financial Turmoil at Hyundai Asset Management

Hyundai Asset Management faces a financial crisis after the expiration of a currency hedge contract linked to its UK real estate fund, leading to significant investor concerns.

The Root of the Problem

The Hyundai YouFirst Real Estate Investment Trust No. 30 Fund, launched in 2020, aimed to secure an Edinburgh office leased by Aegon’s UK branch. A five-year currency hedge contract, set at 1,452 won per pound, expired on June 26, leaving the company with hefty financial dues due to adverse exchange rate movements.

Investor Impact and Market Downturn

With the exchange rate soaring to 1,846 won per pound, Hyundai failed to pay a 12.77 billion won settlement to SC First Bank. The situation worsened as the Edinburgh property's value dropped by 28%, pushing the fund's LTV ratio above 80% and trapping funds with lenders.

Looking Ahead

Hyundai Asset Management has only repaid a fraction of its 33.77 million pound contract and faces an annual overdue interest of 800 million won. The focus now shifts to refinancing the senior loan before next month's maturity date, amidst growing investor unease.