KCGI completes deal to acquire Hanyang Securities

Hanyang Securities Co. CI

South Korea’s activist fund Korea Corporate Governance Improvement (KCGI) has signed a formal agreement to acquire Hanyang Securities Co., following weeks of due diligence and negotiations with the seller, Hanyang Foundation.

The acquisition positions KCGI to potentially expand into a comprehensive financial firm, encompassing both asset management and securities, pending approval from Korea’s financial authorities.

According to industry sources, KCGI signed a stock purchase agreement (SPA) with Hanyang Foundation, Paik Nam Tourist Co., and HBDC Co. on Thursday.

The deal, which involved 3.77 million common shares or 29.59 percent of Hanyang Securities shares, is valued at about 220.4 billion won ($165.6 million).

The agreement comes roughly seven weeks after KCGI was selected as the preferred bidder for the acquisition on August 2.

Initially, KCGI had offered 65,000 won per share, but the final price was adjusted to 58,500 won per share.

While both parties initially aimed to complete negotiations by September 6, talks extended due to disagreements over pricing, resulting in two deadline extensions.

With the agreement now signed, KCGI will submit a request for a major shareholder eligibility review to the financial authorities, a process that is typically completed within 60 days, although extensions can occur if additional documentation is needed.

Hanyang Securities, founded by Hanyang Foundation in 1956 to diversify its revenue streams, is ranked 28th in Korea by equity capital.

Though a smaller player in the domestic market, the firm has seen rapid growth since a new CEO took over in 2018, with strengths in corporate finance, particularly in bond issuance and real estate financing.