Mirae Asset, Global X snap up local funds outfit ETF Securities

The South Korean investment house, with more than $640bn in assets under management, has long had an interest in expanding its operations in Australia.

Graham Tuckwell is executive chairman of ETF Securities. Picture: John Feder

South Korean investment house Mirae Asset Global Investments, and its subsidiary Global X ETFs, have acquired exchange-traded funds giant ETF Securities.

Mirae, which is based in South Korea, has long held an interest in expanding in Australia, and previously owned a stake in rival ETF provider BetaShares.

Global X chief executive Luis Berruga told The Australian that little would change at ETF Securities – other than the departure of Graham Tuckwell, the chairman and owner of the company he founded in 2003.

“The business is doing very well, it has a very competent local team they are launching products, so we don’t need to fix anything because there is nothing wrong,” Mr Berruga said.

Mirae, which has assets under management of some $US628bn ($908bn), acquired Global X in 2018. Mr Berruga said the South Korean firm had not made any changes to his business after the departure of the two founders.

Following the sale – the price of which has not been publicly disclosed – ETF Securities’ head of product Evan Metcalf and head of distribution Kanish Chugh, will remain at the business.

The sale of ETF Securities will cap a long career for Mr Tuckwell with ETF products which began with a gold-backed fund in 2003. It has since expanded into other funds backed by other asset classes, most recently bitcoin.

Mr Tuckwell, a former Salomon Brothers banker, has been offloading parts of the ETFs empire for some years. In 2011, he brought in Goldman Sachs to run a sales process for the group.

Mr Tuckwell told The Australian on Wednesday that it made sense to sell his company now to Global X and Mirae.

“I know pretty well everyone in the industry, and I knew who to speak to if I wanted to do this,” he said. “The wonderful thing – or the bad thing – (about ETFs) is that your competitors know exactly what your revenues are and they can pretty well calculate your expense base. Everyone has an fair idea of what’s going on so in that sense they are pretty simple businesses to have conversations with others about.”

Mr Tuckwell will continue to run a venture capital and private equity operation out of London, and said he would devote more of his time – and more of his money – to an already-significant philanthropic foundation.

Global X’s Mr Berruga said the ETF industry was continuing to expand and would “become the investment vehicle of choice for the vast majority of investors”. The company had a presence in all major markets except for Australia, Mr Berruga added.

Byungsung Lee, the chief executive of Mirae, said in a statement on Wednesday that he was “incredibly excited to enter the Australian market and to meaningfully expand our global ETF footprint”. “This acquisition underscores Mirae Asset’s continued commitment to maintaining industry-leading ETF businesses in key markets around the world and brings immediate scale to our operations in Australia,” he said.

Mirae was, until last year, the majority shareholder in BetaShares, another major Australian ETF provider. It sold its stake to private equity firm TA Associates.

The Australian ETF market has been rapidly expanding in recent years. In its most recent review, BetaShares said the local market had a value of $131.3bn – down $2.2bn in May but up 17.6 per cent – or $19.6bn – over the last 12 months.

There were 292 products listed in Australia, with four new products launching – all of which were cryptocurrency ETFs including two from ETF Securities – onto the Cboe Australia exchange.

“Global X has worked to develop the infrastructure to be a leading ETF issuer, not just in the US, but in key … markets around the world,” said Mr Berruga.

“ETF Securities and Global X share an exploration mindset that has allowed both businesses to quickly adjust to the demands of a very fast industry, and we are thrilled to leverage our global capabilities to support ETF Securities’ next phase of growth.”