Korea Investment & Securities Co. (KIS) acquired a 75 percent stake in a mid-sized Indonesian securities firm for $36.6 million (40 billion won) in early December, the company recently announced. Korea Investment Holdings said that its subsidiary, Korea Investment & Securities, bought a major stake in Danpac Sekuritas as part of its efforts to strengthen its overseas business.
It confirmed that all relevant approvals including those from Otoritas Jasa Keuangan of Indonesia have been obtained.
The purchase signals renewed interest by Korean investors in Indonesian markets. Danpac Sekuritas is a securities brokerage company incorporated in Indonesia, and is a member of the Indonesia Stock Exchange.
Korea Investment & Securities Co., Ltd. provides financial services and offers securities dealing, brokerage, underwriting, online trading, and asset management services. The acquisition is in line with the company’s strategy to expand its securities brokerage business as an integral part of a long-term plan to become Asia’s biggest investment bank. This also includes deepening its presence in key Asian markets such as Indonesia.
Korea Investment Holdings has recently recapitalized Korea Investment & Securities and became aggressive toward further acquisitions after having failed to take over Daewoo Securities and Hyundai Securities last year. President Ryu came to Jakarta himself to sign the deal on Nov. 12, which was the first big deal signed by KIS since 2014 when it set up its local branch office in Jakarta.
The name of Danpac Sekuritas will be changed to Korea Investment Securities Indonesia and begin to operate in the local securities market from the first half of 2018.
President Ryu said looking at the brokerage fees paid in Indonesia, “we can see that the Indonesian market is much bigger than Vietnam and thus can deal with more financial products including bonds, and engage in a number of other financial markets including IB. Danpac Sekuritas’ earnings breaks down to 39 percent in brokerage fees, loans on credit 39 percent and IB 22 percent.”
Danpac Sekuritas is ranked among the 10 largest bond dealers in the S.E. Asian country. President Ryu said the new Indonesia affiliate will also introduce the HTS (home trading system), and MTS (mobile trading system) and the Indonesian affiliate will be so managed to rank among the five top securities dealers in the host country as soon as possible.
KIS will use its strategy from Vietnam that helped to boost KIS Vietnam to rank among the 10 largest from around the 50th.
Ryu also said he has a plan to take over an asset management firm in Indonesia or set up a new one . He noted that the asset management operation is expanding fast in the S.E. Asian country.
The Indonesian securities market is valued at around $482 billion, about five times bigger than the Vietnamese stock market, with nine foreign securities firms ranked among the 10 largest securities dealers. Beside KIS, Korean securities firms operating in Indonesia include Mirae Asset Daewoo, NH Investment Securities, Shinhan Financial Investment and Kiwoom Securities.
Mirae Asset Daewoo is ranked the 5th among securities dealers in the S.E. Asian country.
Korea Investment & Securities Co., Ltd. provides financial and merchant banking services in South Korea and internationally. The company offers brokerage services for domestic stocks and futures/options to foreign institutional investors; and brokerage services for Korean investors to invest overseas, including overseas stocks and bonds. It also provides brokerage services for stock borrowing and lending; corporate finance; and investment funds.
In addition, the company offers bond brokerage and analysis/bond management services; and financing consulting services for initial public offerings ranging from establishment to follow-up after listing. Further, it provides consultation services on the privatization in public companies, and mergers and acquisition; projects and structured finance services; private banking services; derivatives, such as futures, options, and swaps; and onshore fund products that invest in Korea and overseas securities markets.
The company was formerly known as Korea Investment Trust Management & Securities Co., Ltd. and changed its name to Korea Investment & Securities Co., Ltd. in June 2003. The company was founded in 1974 and is based in Seoul, South Korea. Korea Investment & Securities Co., Ltd. operates as a subsidiary of Korea Investment Holdings.