Mirae Asset Securities received the right to operate an investment banking ahead of a scheduled M&A with Daewoo Securities.
The acquirer would have automatically earn the right to operate after the two units merged in November under the new name Mirae Asset Daewoo. But the company said it nevertheless applied for a license in order to settle the resources and infrastructure needed to undertake the investment banking business as early as possible.
“We’ve been adjusting division structures to make them tailored to the newly-focused services.” a Mirae Asset Securities spokesperson said. “For one, we elevated the status of our Prime Brokerage Service to increase the size and amount of personnel resources.” The Prime Brokerage Service handles hedge funds, a financial product that a company with over 3 trillion won can offer.
Mirae Asset Securities said that it has set out to hire investment banking professionals. Initially, the company hired eight professionals specializing in investment banking who worked at Hana Financial Investment. The swift moves reflect an aggressive approach by the company’s chairman, Park Hyeon-joo, to grow the investment banking division. Park vowed to develop Mirae Asset Daewoo into Asia’s premier investment bank, with a target of 10 trillion won in assets by 2020 and a 10 percent rate of return.
Mirae Asset Daewoo will inject funds amounting to 180 billion won into its New York affiliate, with the company deciding to take over new shares worth 150 million to be issued by the affiliate, the company said on Nov. 22. The company will finalize the date after reviewing exchange rate trends.
Officials of the Mirae Asset Group affiliate said the New York affiliate has been considering whether to expand its operation to the Prime Brokerage Service in the U.S. and is trying to increase its capital to back up the new business sector.
“Mirae will likely benefit from investment banking and trading thanks to Daewoo Securities’ expertise in investment and asset management.” said Jun Bae-seung, an analyst at eBest Securities & Investment. “With the increased assets and its own capital pulled out of alternative investments like real estate purchases, Mirae will expand its investment banking business.”
Mirae recently embarked on a massive real estate buying spree. This year alone, the group and its affiliates have purchased five offshore properties, taking the value of its property acquisitions to over 2.5 trillion won. The combined figure for the first six months of this year accounts for half of all property investments made by the group since 2006. Park’s ambitions extend beyond the company’s numbers. He hopes the merger will serve as a counterpoint to the risk-averse sentiment prevalent in Korea’s financial circles. Mirae Asset Daewoo Securities merged with Mirae Asset Securities on Nov. 1, with Chairman Park Hyeon-joo taking over as the chairman and CEO of the newly merged securities firm. The boards of the two firms approved the merger, which will be made in the form of Mirae Asset Daewoo taking over Mirae Asset Securities. The merger ratio is 1:2.971.
Mirae Asset Daewoo Securities made a capital increase of $100 million (113.5 billion won) to its subsidiary in New York to strengthen its overseas operation.
The latest movement was made just six days after Park Hyeon-joo, chairman of Mirae Asset Financial Group, revealed a plan to increase capital to overseas subsidiaries during the open business strategy conference on April 15. It showed Park’s will for “Speed management” to strengthen the global competitiveness of Mirae Asset Daewoo Securities.
Mirae Asset Daewoo publicly announced that it participated in a paid-in capital increase to its affiliate in New York and acquired 25,000 new stocks for $100 million (113.5 billion won) on April 21. Accordingly, the capital of the subsidiary increased by nearly 10 times from $12 million (13.62 billion won) to $112 million (127.12 billion won).
Founded in 1992, Mirae Asset Daewoo’s subsidiary in New York has been selling Korean stocks to American institutional investors and selling American stocks to Korean institutional investors. With the latest capital increase, however, it will directly invest in assets, including shares in the U.S. and seek investment opportunities in North America and Central and South America.
An official from Mirae Asset Daewoo said, “The latest capital increase was made to secure finances for the wealth management business expansion of the affiliate in New York and expand its alternative investment and principal investment.”
The subsidiary will make not only a direct investment in the market but also a joint investment with the related divisions in the headquarters and Mirae Asset Global Investments when it finds other investment opportunities.
Meanwhile, Chairman Park announced a plan to increase capital by 300 billion to 500 billion won ($264.32 million to $440.53 million) to its affiliates in the U.S., Indonesia, Vietnam and London, in which Mirae Asset Daewoo already has local offices. Thus, additional paid-in capital increase will continue into the future.
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