Attractive M&A Target
Another restructuring of the securities industry of South Korea has begun with small and medium-sized securities firms on the M&A market after the previous restructuring took the form of M&A of major securities companies that led to the creation of large investment banks. The M&A of the smaller firms at this time is expected to result in the creation of those specialized in certain fields.
The sale of SK Securities is drawing much attention in this context. Experts point out that SK Securities will be able to better respond to market environments once it leaves its parent conglomerate and the company is a very attractive M&A target in that the acquisition of only 10% of its shares can lead to a change in hands and SK Securities is highly competitive in the debt capital market (DCM). According to Bloomberg, SK Securities managed asset-backed debt securities transactions worth 2.1915 trillion won in 2016 in the DCM market, ranking second in this category.
It is expected that the sale of SK Securities will help accelerate the M&A of securities subsidiaries of large corporations. Examples of these include HI Investment & Securities, a subsidiary of the Hyundai Heavy Industries Group that failed to be sold last year. Hyundai Mipo Dockyard, which is the largest shareholder of HI Investment & Securities, recently announced that it was aiming to sign a stock purchase agreement for the sale of the securities firm within this year. The firm has an equity capital of approximately 700 billion won and Korea Investment & Securities, Samsung Securities and KB Securities are expected to show their interest in it.
In the meantime, eBEST Investment & Securities, which has failed to sell itself for five years or so, is being pressed for time with its put options involving financial investors expiring in July this year. Golden Bridge Investment & Securities recently sent letters of intent to some foreign investors as well after failures in the past attributable to governance structure issues and labor-management conflicts. Under the circumstances, the number of securities companies doing business in South Korea is estimated to decrease from 62 to less than 50 between the end of 2013 and the near future following the M&A deals.