Korea Investment & Securities to take over KakaoBank shares from affiliates

Korea Investment & Securities building

Korea Investment & Securities is seeking to acquire KakaoBank shares from its parent and subsidiary to bump up its equity capital to more than 9 trillion won ($6.97 billion), large enough to make it a investment banking giant in Korea after the country’s top IB Mirae Asset Securities.

Korea Investment & Securities said Monday that it has asked for an approval from the Financial Services Commission to take over stakes in KakaoBank owned by its parent Korea Investment Holdings and subsidiary Korea Value Asset Management. KakaoBank is a mobile-only lender affiliated to Korean app giant Kakao.

Korea Investment Holdings, a holding company that fully owns Korea Investment & Securities, currently holds a 4.0 percent stake in KakaoBank. Korea Value Asset Management, a wholly-owned subsidiary of Korea Investment & Securities, is the second largest shareholder of Kakao Bank with a 23.2 percent stake. They together own a 27.2 percent stake in KakaoBank, bigger than the mobile bank operator’s largest shareholder Kakao with a 27.18 percent stake.

Once Korea Investment & Securities takes over all the KakaoBank shares, its equity capital would jump by 3 trillion won to more than 9 trillion won, large enough to challenge the country’s No. 1 securities firm Mirae Asset Securities with 9.04 trillion won as of the third quarter of this year. NH Investment & Securities holds the second largest equity capital worth 6.81 trillion won, followed by Korea Investment & Securities with 6.3 trillion won.

In Korea, a securities firm with equity capital of 4 trillion won or more is allowed to operate as an investment bank, which is capable of issuing short-term debts based on its credit standing. An investment bank with more than 8 trillion won in equity capital is allowed to run more diverse IB businesses ranging from investment management to real estate trust operations.

Korea Investment Holdings tried to transfer its KakaoBank shares to Korea Investment & Securities even before the internet bank went public, but it was unable to do so after the securities unit was found guilty of violating fair trade law in 2017, said an industry expert. However, the company is now allowed to carry out its plan as five years have passed since then.