Invest KOREA

More Than a Decade of Growth

Macquarie Chairman John Walker recounts a decade of the financial company's growth in Korea

Most people think 'finance' and think numbers. John Walker thinks people.

"It's not computers or telephones or desks or buildings." said Walker, Chairman of the Macquarie Group of Companies, Korea, about the finance sector. "It's about how people feel."

When Walker first arrived in Seoul, what he felt was a "zing" about the place. A stay he thought would last a couple years to open Macquarie in Korea turned into 11. An office that started with 5 people has grown to 300. You could say his story in Korea is Macquarie's story in Korea.

"I didn't expect the scale of operation that we have now." Walker said.

He credits a combination of factors for Macquarie's local success, including most notably "a happy coincidence of business cultures."

Macquarie Group of Companies, Korea is one of the nation's fastest-growing foreign financial companies. It operates 12 businesses, manages three investment funds and is a leader in infrastructure funds. The Australia-based Macquarie Group was founded in 1969 and is a leading provider of banking, financial, advisory, investment and funds management services. The company operates in 28 countries and employs more than 15,500 people. Assets under management as of September 2010 were $307 billion.

The staff of the Korea office is more than 90% Korean, and this is part of the company's philosophy to localize, be culturally sensitive and forge ties with Korean society.

"One of the keys is human capital," Walker says about Macquarie's success in Korea. "Early on, most of the staff didn't necessarily have the sort of global investment banking knowledge. But they were so keen to learn and the underlying education was so good that they were very quickly able to grasp all the technical concepts and things."

Another success factor? Good timing.

When Macquarie opened in Korea, people recognized the capital markets were relatively undeveloped, Walker said. There was what he calls a "hunger" for new financial technologies, new management technologies and new investment products and opportunities. The company responded by introducing private infrastructure financing, infrastructure funds, equity derivative products and more.

"I think a lot of it has been kind of the blend of our management culture, which is that bottom-up, freedom-within-boundaries sort of thing, with the Korean people's natural predilection to create businesses and grow businesses and be number one," Walker said.

Macquarie has a similar predilection. The Korea office has acquired 10 operating licenses in 11 years and invested in a diverse range of businesses in Korea covering everything from the transportation to the media sectors.

Assets for the Macquarie Korea Infrastructure Fund, a joint venture between the Macquarie Group and the Shinhan Financial Group, include the Incheon International Airport Expressway, Woomyunsan Tunnel, the Incheon Grand Bridge, Gwangju 2nd Beltway (sections 1 and 3.1) and Seoul Subway Line 9 (section 1). Macquarie's investments have created countless jobs. Walker estimates that greenfield infrastructure construction the company has been engaged in for the last ten years has created 40,000 jobs.

The availability of capital - the strong liquidity of the market - and Korea's "rule of law" have helped Macquarie grow here, he added. "We felt confident that when we made an investment, we were actually making an investment which is transparent and sort of, the owner is clear," Walker said. "In some other Asian countries, this issue of ownership is a little less clear."

The way Walker sees it, Macquarie's growth and creating of employment have contributed to "the marketing of what is possible in Korea." Under a freedom-within-boundaries concept, Macquarie Korea encourages new initiatives and enjoys decision-making autonomy in terms of its relationship with Sydney headquarters.

This corporate tendency has coincided with Korea's ability to change and make progress in liberalizing its financial markets. Walker points to how the country's regulatory environment has grown in "leaps and bounds" compared to the late 1980s, the multiplication of the stock market in size, the creation of legislation that allows for the establishment of domestic investment banks and how foreign investments are now a priority.

He even has catchy tags for Korea's paradigm shifts over the decades: "perspiration economy" (1960 to 2000), "inspiration economy/aspiration economy" (2000 to 2009) and "transformation economy" (2010).

Of course, as Korea strives to become a leading financial hub in Asia, there are ways Walker says it can improve. Some of Korea's regulations are still not ideally designed for the operation of international financial institutions, Walker said. And Korean financial groups could hire more foreigners to create more diversity in the industry and the right balance of human capital.

"But Korea has come a long way in terms of making it attractive for people to live here," said Walker, citing improved quality of life and accommodations in the time he's been here, a growing presence of parks and good infrastructure.

As for what's next for the company, Walker really can't say. After all, how can someone who pays homage to timing and "happy coincidence" predict what's to come?

"It's the nature of our business," he said of the unpredictability. "But what I know is that there hasn't been one single year where we haven't had a new business or new license or some kind of new initiative."