Mirae Asset ends $3 bn IFC deal with Brookfield, seeks deposit refund

Mirae Asset Global Investments Co.’s planned purchase of the International Finance Center in Seoul worth 4.1 trillion ($3 billion) from Canada’s Brookfield Asset Management Inc. has broken down.

The South Korean asset manager is now seeking to reclaim its 200 billion won contract implementation deposit from Brookfield, setting the stage for a possible legal dispute over contract terms.

In May, Mirae Asset was selected as the preferred buyer of the landmark tower by Brookfield Asset Management. The deal was set to be Korea’s largest real estate transaction this year. Mirae paid 200 billion won in deposit as part of the deal.

Under the initial deal signed in May, Mirae agreed to buy the IFC on the condition that the 4.1 trillion won real estate investment trust (REIT) it set up to finance the purchase receive business operation approval from the government, according to industry sources.

In case Mirae did not obtain state approval, it was supposed to get back the 200 billion in deposit from Brookfield, the sources said.

In August, the Ministry of Land, Infrastructure and Transport rejected the financing plan, saying the scheme was heavily dependent on borrowings and could hurt investors.

The property comprises three office towers, Conrad Hotel Seoul and IFC mall.

The sale of the complex to Mirae would have created an over 50% return to Brookfield in six years.

Back in 2016, Brookfield Asset Management acquired IFC Seoul from the AIG Group for 2.6 trillion won in its first real estate purchase in Korea.

A Canadian multinational company with over $725 billion of assets under management, Brookfield is one of the world's largest alternative investment management firms.

CASE GOES TO SINGAPORE ARBITRATION BODY

Industry officials said Brookfield had wanted to make the deal offshore in order to avoid being taxed by the Korean authorities. However, Mirae Asset has wanted the deal to be made in Korea, where Brookfield must pay taxes on gains from the deal to domestic tax authorities, the officials said.

Mirae Asset has requested the return of the deposit in line with procedures, but the seller is not in agreement, saying it is  Mirae Asset that is responsible for not getting permission, sources said.

On Monday, Mirae Asset took the case to the Singapore International Arbitration Centre to receive the deposit.

The Korean asset company is known to be considering claiming damage compensation if the arbitration body rules in its favor.

Mirae Asset Global Investments and its affiliates manage 280 trillion won in assets as of 2021. With branches in 14 overseas countries in the Asia Pacific, the Americas and Europe, it invests in global equities, fixed income and properties. It also manages exchange-traded funds (ETFs) and individual pension plans. 

Write to Ji-Hye Min at spop@hankyung.com
In-Soo Nam edited this article.