Naver Corp., South Korea’s platform powerhouse, is seeking to fold Dunamu Inc., operator of the world’s fourth-largest crypto exchange Upbit, into its ranks through a stock-swap deal, a move expected to accelerate the country’s bid to build a won-based stablecoin ecosystem.
Naver’s fintech subsidiary, Naver Financial Corp., is reportedly in advanced talks with Dunamu for a stock-for-stock merger deal, in which the Upbit operator will become the Naver fintech arm’s wholly-owned subsidiary, according to people familiar with the matter on Thursday.
Naver is the largest stakeholder of Naver Financial, holding about 75%, with the remainder owned by Mirae Asset Financial Group companies.
“The two companies are expected to hold board meetings soon to finalize the swap,” said one industry official.
Naver said in a regulatory filing Thursday that a share swap deal is among several forms of cooperation Naver Financial is exploring with Dunamu, including stablecoins and unlisted-share trading, but that no decisions have been made.
The combination of Naver Financial, which boasts an annual transaction of 80 trillion won ($57 billion), and Dunamu, operating Korea’s largest crypto exchange Upbit, is expected to reshape the Korean digital finance landscape, analysts said.
TO LAY GROUND FOR A WON-BASED STABLECOIN ECOSYSTEM
The tie-up is, especially, projected to expedite their joint work on a won-based stablecoin, a project that has gained momentum with the government’s push for legislation supporting local-currency stablecoins, a key campaign pledge of President Lee Jae Myung.
The country’s ruling Democratic Party has unveiled proposed legislation to promote stablecoins pegged to the local currency.
Under one roof, Dunamu, regarded as a leader in blockchain technology, is expected to issue the tokens, which would circulate on Naver Pay, Naver’s payment app.
Paired with Naver’s strength in e-commerce, the initiative could quickly establish a robust won-based stablecoin system.
Mirae Asset Securities Co. said in a recent report that if Naver and Upbit move ahead with a plan to jointly issue won-pegged stablecoins, the business could generate as much as 300 billion won in annual revenue by 2030.
Beyond stablecoins, Naver, Naver Financial and Dunamu are likely to explore joint investments in fintech and artificial-intelligence startups and consider overseas expansion.
They are said to be weighing a long-term commitment of tens of trillions of won to the technology ecosystem, people familiar with the discussions said.
IN THE FINAL STAGES OF NEGOTIATIONS
Naver Financial and Dunamu are said to have formed a task force for the stock swap deal and are in the final stages of negotiations to iron out details, such as a fair swap ratio between the two shares, according to sources.
The most likely scenario is that Naver Financial issues new shares to swap with shares held by Dunamu’s existing shareholders to make Dunamu shareholders Naver Financial shareholders.
Dunamu’s major shareholders include Dunamu co-founder and Chairman Song Chi-hyung, with a 25.5% stake; Dunamu Vice Chairman Kim Hyoung-nyon, 13.1%; Kakao Investment Co., 10.6%; Woori Technology Investment Co., 7.2%; and Hanwha Investment & Securities Co., 5.9%.
Naver shares surged 11.4% to close at 254,000 won on Thursday on expectations that the deal will provide a new growth engine.
Industry observers expect that with Dunamu under its wing, Naver and Naver Pay could emerge as a super app spanning shopping, finance and cryptocurrency trading in consumers’ daily lives.
By contrast, Dunamu’s shares on the over-the-counter market tumbled by roughly the same margin as Naver’s gain, as investors saw the company’s prospects for an overseas listing effectively dashed by its possible absorption into Naver.
By Sookyung Seo
skseo@hankyung.com
Jennifer Nicholson-Breen edited this article.
