Hanyang Securities’ headquarters in Yeouido, Seoul
Hanyang Securities Co., a small-sized South Korean brokerage firm, has been put on the market as its parent Hanyang University Foundation is scrambling to keep afloat its property development arm and university hospital grappling with liquidity crunches, according to people with knowledge of the matter.
Seoul-based private equity firm KCGI, logistics-to-trading conglomerate LX Group and Woori Financial Group are vying for a controlling stake in the brokerage firm, a deal estimated at up to 150 billion won ($109 million), said the sources.
Market Insight, the capital market news outlet of The Korea Economic Daily, exclusively reported the proposed stake sale on Sunday, driving the share price of Hanyang Securities 9% higher to 15,200 around midday.
In response to the report, Hanyang Securities on Monday confirmed the Hanyang University Foundation, its largest shareholder, has put the company up for sale. But it said nothing has been determined about details such as its buyer, sale price and sale process.
The sources said that KCGI, better known as an activist fund, is the most aggressive in bidding for the country’s 30th-largest brokerage firm in terms of equity capital among potential buyers.
Hanyang Securities specializing in fixed income trading might be a good fit for KCGI established in 2018 by Kang Sung-boo, a former fixed-income analyst.
The investment fund is understood to envision a full-fledged financial group with a possible purchase of Hanyang Securities after it took over Meritz Asset Management, currently KCGI Asset Management, in 2023.
Kang Sung-boo, founder and Chief Executive of KCGI
Hanyang University Foundation holds a 16.29% stake in the brokerage arm. Including the shares held by other stakeholders, they control 40.99% of the firm.
Based on its market capitalization of around 177.6 billion won as of Friday, the controlling stake is estimated at 100 billion-150 billion won ($72 million-$109 million) in value, including a management premium.
If the stake sale goes through, it will mark the first time for the brokerage company to change hands in its 68-year history.
WOORI FINANCIAL GROUP, LX GROUP
Woori Financial, South Korea’s No. 4 banking group, is also interested in Hanyang Securities.
It is on the market a few months after Woori acquired Korea Foss Securities Co. in May. Korea Foss Securities will be rebranded Woori Investment & Securities Co., the namesake of its former brokerage unit it sold to NongHyup Financial Group in 2014.
LX Group, split up from LG Group, is said to have expressed interest in Hanyang Securities as well. The conglomerate has been active in the domestic M&A market. Last year, it considered joining the race for the country’s No. 1 shipping company HMM Co. and Jeonju Paper Corp.
Industry observers said that there was a dearth of domestic brokerage firms on the market, thus Hanyang Securities provides a rare opportunity to purchase a domestic brokerage company.
Hanyang University Hospital in Seoul
The proposed sale of a controlling stake in the brokerage firm comes as non-residential building developer Hanyang Industrial Development Co. is reeling from the the project financing market meltdown amid the prolonged slump in the real estate industry.
Last year, it racked up losses of 49.6 billion won with contingent liabilities linked to project financing exceeding 400 billion won.
Further, a surge in losses at Hanyang University Hospital since its junior doctors quit en masse in February this year in protest of a sharp increase in the medical school admission quota dealt a heavy blow to the private education foundation.
By Jong-Kwan Park
pjk@hankyung.com
Yeonhee Kim edited this article
