Regent Pacific has returned to profitability in the first half of the financial year, posting an attributable profit of $304.82 million for the six months to September 30. The result represents a reversal of fortune for the listed fund management and Internet company, which suffered a $390 million loss for the whole of last year despite a second-half profit. The losses were largely the result of disastrous investments in Russia. Losses for the first half of last year were $443.05 million. Turnover for the group jumped to $340.69 million for the six-month period, up from $192.28 million for the same period last year. Regent chairman Jim Mellon pointed to the success of the group's strategy in South Korea, where it has a 60 per cent stake in a holding company, Regent Korea, which has interests in financial services as well as on-line ventures. Looking ahead, Mr Mellon expected the group to make a profit for the full year, saying income from its Seoul brokerage Daeyu Regent Securities was already above average last month and this month. 'We have no debt, we have quite a lot of assets and prospects in Korea are very, very good,' he said. 'We have said this is going to be a very good year. I think our strong profitability will be a surprise to the marketplace.' The group is planning a US$192 million capital raising for Regent Korea, which although diluting its holding to 43 per cent, will increase Regent's capital to about $300 million and enable it to invest further in Korean financial companies. The group has said that it intends to build a 'financial supermarket' in Korea. The funds will be raised via placements with 35 mainly United States-based private equity partners, who will then hold a 29 per cent stake in Regent Korea between them, leaving 14 per cent for the company's other shareholders, State of Wisconsin Investment Board and Seoul-based company Midas. 'The eventual listing of Regent Korea should also help in the recognition of the true value of our own shares,' Mr Mellon said. Regent also hopes to spin off its 100 per cent owned on-line subsidiary Korea Online Holdings - its platform for Internet banking, securities trading and insurance - in the first half of next year. One setback was the breakdown in the $40 million sale of the venture capital business of Korea's second-biggest commercial lending bank Kookmin to Regent. Mr Mellon said negotiations with Kookmin had faltered due to a dispute over an alleged lack of information, which Regent claimed affected the value of its bid. Conceding the Kookmin deal may not proceed, he said the plan was not integral to Regent's acquisition programme in Korea.
