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(Seoul=Yonhap Infomax) Ha Rin Song, Kyu Sun Lee – Meritz Securities Co., a leading South Korean investment bank, is set to bolster its capital base with a KRW 500 billion ($380 million) rights offering as it accelerates expansion in corporate finance and prepares for entry into the Investment Management Account (IMA) business.
The company announced on the 25th that it will issue KRW 500 billion worth of new shares through a third-party allotment. To expedite the capital increase, Meritz Securities will issue privately placed convertible preferred shares (CPS). The offering will comprise 38,756,790 non-voting convertible preferred shares at KRW 12,903 per share, representing 6.09% of total shares outstanding.
The preferred shares will carry an annual preferred dividend rate of 5.20–8.00%. Common share dividends will only be paid after cumulative preferred dividends are fully distributed. The conversion period runs from December 12, 2025, to December 12, 2055, at which point the shares can be converted into Meritz Securities common stock.
The third-party allotment will be made to Nexrise Jeilcha, a special purpose company (SPC). The CPS will be subject to a one-year lock-up after issuance. A shareholder agreement, including a put option on the preferred shares, will be signed between Meritz Financial Group, the largest shareholder, and investors.
Following the capital increase, Meritz Securities’ equity capital will rise from KRW 7.1917 trillion to KRW 7.6917 trillion. On a consolidated basis, the old Net Capital Ratio (NCR) will improve from 146.5% to 159.2%, a 12.7 percentage point increase.
Meritz Securities emphasized that the capital injection is intended to strengthen its core capital, distinguishing it from supplementary capital such as redeemable preferred shares, hybrid securities, or subordinated debt.
The company aims to leverage the enhanced capital base to secure a foothold in new business areas. With the capital increase, its year-end equity capital is expected to approach the upper KRW 7 trillion range, positioning Meritz Securities as the fourth-largest securities firm in South Korea by capital.
“With our expanded capital strength, we are now positioned to compete head-to-head with other major investment banks,” Meritz Securities said. “This strategic move secures the foundation for entering business segments open only to securities firms with equity capital exceeding KRW 8 trillion.”
hrsong@yna.co.kr
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