President Hong Sung-guk of KDB Daewoo Securities Co.(Photo:KDB Daewoo Securities Co.)

KDB Daewoo Securities Co. came up with "Global Duru Duru Wrap" for those who want to earn more money by investing their funds in right places around the world. The securities firm made up a model portfolio which include various assets around the world more stable than domestic shares and even bonds domestic and overseas as the expected returns would be around from 6 to 7 percent annually, the company said.

The securities firm is scheduled to hold a joint meeting of its key departments once in every three month to check the investment portfolio and come up with a joint house view and through the house view, investments in the investment targets showing very good potentials will be increased while those with risks would be reduced. Included in the portfolio are stocks, which take up a large portion, especially, the U.S. stocks and the stocks in India among emerging market countries.

Korea Development Bank has decided to sell KDB Daewoo Securities either together with KDB Asset Management, both of its affiliates, or separately, and also sell KDB Capital.

Among the potential buyers is KB Financial Group, Shinhan Financial Group and Korea Financial Holdings, while a couple of Chinese financial groups, such as Citic Group and Anbang Financial Group, are reportedly interested in taking over the securities and financial firms. KDB plans to select the priority bidder at the end of this year, in line with the plan approved by the board of directors meeting on Aug. 24.

According to the plan, KDB will take care of its 43 percent of the securities firm’s shares, its 100 percent shares in KDB Asset Management, and 99.9 percent of its shareholdings in KDB Capital. KDB could sell KDB Daewoo Securities in a bundle with KDB Asset Management or separately.

Vice President Lee Dae-hyun said the market situation at the time of sale of the three affiliates will determine a course to sell them — either in a package or separately. KDB cited three major ways to sell the three affiliates, with the first being to sell them as quickly as possible, the second to get as much money as possible, which would take longer, and the last being to help develop the capital market in Korea.

KDB Capital will be sold separately as its assets are vast, he said.

The vice president said the sales notices will be put up in early October so that priority bidders can be determined by the end of the year.

The financial market appears to be the focus on Daewoo Securities among the three financial firms up for sale, as its capital amounts to 4.30 trillion won, one of the largest among securities firms in Korea, meaning a buyer could be put into a position to lead the country’s securities market upon the purchase of the securities firm. Among the probable winners include KB Financial Group. Officials of the financial group have said recently that the group needs to buy a securities firm to further strengthen its non-banking operation side. They said they will soon map out their strategy to offer a joint bid for the securities firm.

Shinhan Financial Group and Korea Financial Group are also eyeing participation in the bidding, along with a number of foreign financial groups and a domestic PEF. China’s Joongshin Securities, the largest securities firm in China, an affiliate of the Citic Group of China, may also take a shot at the bidding, along with Anbo Insurance of China, which took over Tonyang Life Insurance in Korea recently.

The most important matter for the upcoming bidding for Daewoo Securities is the price as for a securities firm as large as Daewoo a 30 percent premium should be added for its management rights with the per share price hitting around 11,750 won recently. The expected price to win the bidding for Daewoo Securities would be around 2.15 trillion won if a 30 percent premium is added.

Daewoo Securities was founded in 1970 as part of the Daewoo Corporation, the second largest conglomerate in Korea after Hyundai. The Daewoo Corporation was better known as an industrial conglomerate, making cars and ships and operating steel works. The South Korean state encouraged large and paternalistic conglomerates to use their capital to expand into unrelated businesses, protected by high tariff barriers and arcane regulations. In this way the car and steel giant Daewoo branched out into dealing in securities.

In the 1990s this strategy hit problems as South Korea opened its markets to foreign competition and at the same time the founders of these conglomerates grew too old to run their creations and passed the reins on to their less focused children.

Daewoo Securities was spun off from the Daewoo Corporation in 1999 when the parent corporation was suffering from a debt crisis. When Daewoo was broken up the securities division was the largest source of profits within the firm. As well as a large number of branches around South Korea, It had an international presence in London and New York. It was taken over by the Korea Development Bank.