The artificial intelligence quant expert house Exponential Asset Management significantly boosted its performance last year through public offering investments. It saw a large increase in performance fees and disposal gains as a result of decisively investing in funds and proprietary assets in the IPO market. Based on the rebound in performance, it plans to expand into advisory and discretionary businesses.

According to the industry on the 22nd, Exponential Asset Management's net profit last year was 3.1 billion won. This is almost five times the amount from 661 million won a year ago. This marks the highest performance ever since its establishment in 2017. Exponential Asset Management has been steadily increasing the size of net profits every year since turning a profit in 2019.

During the same period, operating profits increased nearly sixfold to 3.8 billion won. Operating revenue increased threefold to 5.4 billion won from 1.8 billion won a year earlier, while operating expenses were limited to a 43.6% increase to 1.6 billion won, resulting in an unusually large operating profit margin.

Fund business and proprietary investment drove overall performance. Last year, Exponential Asset Management accounted for 2.2 billion won in performance fees from fund management and earned 0.8 billion won in entrusted fees, bringing in a total of 3.1 billion won in management fees alone. This figure is almost three times higher than the previous fiscal year.

As of the end of last year, Exponential Asset Management was managing a total of 39 funds. During the same period, the balance of these funds was 123.4 billion won. Last year, the number of funds increased by 12 and the balance increased by 68 billion won. This is the first time Exponential Asset Management's balance has exceeded 100 billion won.

The effect of new funds targeting the public offering market was significant. In the second half of last year, Exponential Asset Management introduced successive funds such as 'Exponential Solution No. 2' and 'Exponential REITs Income No. 1'. These funds attracted hundreds of billions of won from the market and contributed to expanding the house's volume.

'Exponential Solution No. 2' aimed to achieve an annual return of around 10% by diversifying investments into existing IPO-focused funds while independently participating in IPO deals. After its establishment in July of the previous year, the cumulative return rate by the end of the year was 11%.

The performance of proprietary asset investments also benefited greatly from the IPO market. It realized a significant amount of capital gains through indirect investments in public offerings, accounting for 1.7 billion won in securities disposal gains. In 2020, Exponential Asset Management's securities disposal gain was only 244 million won, which grew nearly sevenfold in one year.

Last year, it participated in large-scale IPOs such as Krafton, KakaoBank, KakaoPay, Hyundai Heavy Industries, and Lotte Rental, which led to an increase in return rates and consequently expanded management fees and proprietary asset performance. An industry insider said, "Last year's industry growth was heavily influenced by the market."