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(Seoul=Yonhap Infomax) Ha Rin Song, Kyu Sun Lee – Amid an environment where capital-based business models are increasingly advantageous, South Korea’s securities industry is actively leveraging various funding channels to expand their balance sheets.
Meritz Securities Co. has moved closer to the 8 trillion won ($6.1 billion) capital threshold by launching a 500 billion won ($382 million) third-party rights offering. The 8 trillion won mark is a key benchmark that allows securities firms to expand into new business areas under Korean financial regulations.
According to the financial investment industry on the 26th, Meritz Securities’ standalone equity capital will rise from 7.1917 trillion won ($5.5 billion) at the end of September to 7.6917 trillion won ($5.9 billion) following the rights offering. Should the company post a net profit of over 300 billion won ($229 million) in Q4, it is on track to reach the 8 trillion won milestone within the year. Meritz Securities expects, based on its board resolution, that this capital increase will lift its year-end equity to the high 7 trillion won range, potentially making it the fourth-largest in South Korea’s securities sector.
As of end-September, the equity capital rankings among domestic securities firms were: Korea Investment & Securities Co. at 12 trillion won ($9.2 billion), Mirae Asset Securities Co. at 10.3 trillion won ($7.9 billion), NH Investment & Securities Co. at 8.3 trillion won ($6.4 billion), Samsung Securities Co. at 7.3 trillion won ($5.6 billion), and Meritz Securities at 7.1 trillion won ($5.4 billion). The latest capital increase positions Meritz to surpass Samsung Securities.
Reaching 8 trillion won in equity capital enables Korean securities firms to expand their business scope. Firms with over 4 trillion won ($3.1 billion) in equity can obtain a license for issuance notes (short-term financial instruments), while those with over 8 trillion won can operate Integrated Investment Management Accounts (IMA)—a comprehensive financial investment account unique to Korea.
Previously, NH Investment & Securities also accelerated its IMA ambitions with a 650 billion won ($496 million) rights offering, supported by its parent NH Financial Group, and has already submitted its IMA application.
Meritz Securities, while not immediately seeking an IMA license, views the 8 trillion won milestone as a strategic foundation for future entry into the IMA business. The board also shared the intention to secure a strategic base for entering business areas permitted to firms with over 8 trillion won in equity.
Currently, Meritz Securities is pursuing approval for the issuance notes business, which is open to firms with over 4 trillion won in equity. The company has passed the Financial Supervisory Service’s document review and is now undergoing an external evaluation committee review.
Meritz Securities has expressed a strong commitment to channeling funds raised through issuance notes into pure corporate finance and venture capital at levels exceeding regulatory requirements.
By diversifying its funding channels and lowering the proportion of equity capital in its investment base, Meritz aims to enhance its return on equity (ROE)—a key pillar in its strategy to diversify into retail and traditional investment banking.
hrsong@yna.co.kr
kslee2@yna.co.kr
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