Chairman Park Hyeon-joo of Mirae Asset Financial Group decided boost the capital of Mirae Asset Daewoo Securities through the issuance of new shares, instead of notes, dodging the objection of some financial authorities.
Once the capital boost is completed via the new share issuance, making Mirae Asset Daewoo Securities a huge investment banking firm, handling any deals related with investment management accounts (IMA) in the global IB market.
Mirae Asset Daewoo Co., South Korea's biggest brokerage, announced that it will increase its equity capital to 8 trillion won ($7.37 billion) by issuing new stocks, though the government recently decided to suspend the screening of the company’s permission to issue promissory notes, which is the deposit function of mega-sized investment banks. In terms of size, it will be similar with Nomura Securities Co., which is considered one of leading IBs in Asia.
Choi Hyun-man, executive vice chairman of Mirae Asset Daewoo, said, “The company will expand its capital to 8 trillion won as the first step to become the Korean version of Goldman Sachs.”
“The recent rumor that Mirae Asset Daewoo carried out a paid-in capital increase to run an investment management account, which is only permitted to brokerages with capital of 8 trillion won, because the screening on the approval of the issuance of promissory notes for brokerages with capital of 4 trillion won has been put on hold is mere speculation. It would be great to receive approval, but Mirae Asset will pursue the original goal even if it fails to receive permission,” said Choi on Dec. 18.
He stressed that the company will strengthen its global competitiveness by expanding its capital, saying, “We have made a global investment from 2002 before anyone else and are better at venture capital investment than anyone else.”
Regarding the delay of the paid-in capital increase for Mirae Asset Capital, which was initially scheduled at the end of the year, Choi said, “There is no need to increase capital by issuing new stocks because the company’s assets have greatly grown from six months ago as it focused on its main businesses such as financing related to automobiles and new technologies. Unlike other capital affiliates of conglomerates, Mirae Asset Capital has never caused problems including the incomplete sales of corporate bills of affiliates.”
Mirae Asset Daewoo Securities merged with Mirae Asset Securities on Nov. 1, 2016, with Chairman Park Hyeon-joo taking over as chairman and CEO of the newly merged securities firm. The merger took the form of Mirae Asset Daewoo taking over Mirae Asset Securities. The merger ratio was 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 Apr. 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 to $112 million.
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.
A view of the Mirae Asset Daewoo building in Yeouido, Seoul.(Photos: Mirae Asset)
