Investment & Securities Firms On Rapid Restructuring Flow

Following the formal contract with the U.S.’ Prudential Financial Group to sell off Hyundai Investment & Securities, the government also revealed its plans of selling off Korea Investment & Securities Co. and Daehan Investment & Securities Co., driving fast the force of restructuring the investment and securities business community.

The Prudential Group has been saying that it can further absorb investment and securities firms in addition to its acquisition of Hyundai Investment & Securities Co. Another global mutual fund business, Fidelity, also submitted to the Financial Supervisory Committee to obtain permission to acquire Korean investment and securities firms, which indicates the future prospect of increasing the number of foreign firms that enter the domestic financial capital market.

The Financial Planning Director at the Ministry of Finance and Economy, Byun Yang-ho, said at a press conference on November 25, “We would select a managing company for the sell-off of the two investment companies and then, after some three weeks of deliberation period, bidding application forms will be distributed to domestic and overseas investment firms which are interested in buying the two enterprises by early next year.” He added, “There have been no official inquiries about the sell-off, but I guess that we will be able to select priority candidates for the bidding by early next year.”

As for the specific method for the sell-off, he said, “Our purpose is to sell off Korea Investment & Securities and Daehan Investment & Securities together. However, in case the buyer wants to buy Daewoo Investment & Securities with some favorable conditions for the government, we are willing to do so. The Public Fund Management Committee also agreed with us on the matter.”

The government already put in 9.4592 trillion won worth of public money to the two investment companies and plans to provide additional three to four trillion won for their restructuring before selling them off.

The Prudential Group announced its plan to acquire Cheil Investment & Securities by early next year, which would make the company the number one investment company in terms of its sheer size in Korea.

As the remaining Dong Yang Orion Investment Trust would see its MOU on the management improvement expire on December 3, its fate will soon be determined whether its grand shareholder, the Dong Yang Group, will take care of it or sell it.

This will complete the entire picture of restructuring plans for the five biggest investment and securities firms in the nation by early next year.

Securities Supervisory Chief at the Financial Supervisory Committee, Kim Yong-hwan, said, “The five big firms that transfigured themselves from investment trust corporations to investment securities businesses have been an enormous burden on the market. But by the time their restructuring successively ends, the remaining restructuring work in the securities market including small and medium-sized firms will naturally follow.”

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