Goldman in talks to buy S Korea asset firm - sources

SEOUL, Apr 25 (Reuters) Goldman Sachs is finalising talks to buy a South Korean asset management firm, majority owned by Australia's Macquarie Bank Ltd. , two sources familiar with the situation told Reuters on Wednesday.

Goldman wants to buy Macquarie-IMM Investment Management, in which the Australian investment bank controls 65 percent, with domestic investment firm IMM Co. Ltd. owning the remainder.

The size of the potential deal has yet to be disclosed.

''Macquarie had not originally thought to sell Macquarie IMM, but switched its stance after three to four financial services firms expressed keen interest and made good offers to buy it,'' one of the two sources told Reuters.

''Among them, Goldman proposed the best offer.'' The source added the investment banking group within Macquarie Bank had opposed to the sale, but the fund management group, which controls Macquarie IMM, supported the deal in the interest of shareholders.

Goldman Sachs, Macquarie and Macquarie IMM declined comment.

The potential deal would mean Goldman's entrance into retail business in Asia's third-largest economy, joining in the ranks of global financial services firms such as JPMorgan Chase and ING Group .

Goldman has been focused on businesses with corporate customers and private equity investment in South Korea, including its 9 percent stake in Hana Financial Group , the country's No.

4 financial services firm.

South Korea's 0 billion fund management industry, ranked as the world's 11th biggest according to a regulatory body, is expected to grow at a double-digit rate annually due to rising individual wealth and compulsory retirement savings.

JPMorgan applied for a licence in late March to open the 50th asset manager in the country, an Financial Supervisory Service (FSS) official said, Among 14 fund management firms controlled by foreign companies, Macquarie IMM is a small-sized player with a pre-tax profit of 3.7 billion won in the nine months to December 2006. It manages about 10 trillion won with a capital of 13 billion won.

In contrast, Macquarie Shinhan Infrastructure Asset Management, the Australian bank's other joint venture with South Korea's No. 2 lender Shinhan Financial Group , is the biggest among foreign-owned fund managers. The unit earned 11.5 billion won pre-tax profit in the same period, according to the FSS.

Asset management is one of key financial services which South Korea wants to open up to foreign competition as part of efforts to build the country's financial clout in Asia.

Separately Landmark Investment Trust Management, owned by Morgan Stanley's private equity investment arm, had sent invitation letters to potential suitors and attracted a number of foreign investors, a regulatory official said last week.

REUTERS PV PM1154