SEOUL, Dec. 24 (Korea Bizwire) – Mirae Asset Group, one of South Korea’s leading asset managers, has been picked as the preferred bidder to take over the country’s second-largest brokerage house Daewoo Securities Co., its main creditor said Thursday.
The deal is expected to change the landscape of the brokerage industry as the deal will create the country’s largest brokerage firm with a combined capital of around 8 trillion won (US$6.81 billion), surpassing top player NH Investment & Securities Co.
Beating KB Financial Group Inc., the largest banking group by asset, and other bidders, Mirae Asset is poised to take over a 43-percent stake in Daewoo Securities from the state-run KDB, along with a 100-percent stake in KDB Asset Management, according to state-run Korea Development Bank (KDB).
Though the price tag for the deal is not known, Mirae Asset reportedly offered around 2.45 trillion won, far higher than the market value estimated at around 1.78 trillion won. Daewoo Securities held total assets standing at 4.3 trillion won at the end of June.
KDB will allow Mirae Asset to conduct due diligence on the brokerage before completing the deal in the first half of 2016, according to its officials.
Hit by the Asian financial crisis in the late 1990s, Daewoo Securities went bankrupt and was taken over by KDB in 2000.
In October, KDB announced its plan to put the brokerage firm on sale as part of a government-led privatization plan. A previous attempt in 2008 to privatize the securities firm, as well as KDB itself, fell through.’
Founded in 1997 by current chairman Park Hyeon-joo, Mirae Asset Group provides comprehensive financial services including wealth management and life insurance, having 20 firms under its wing including Mirae Asset Global Investments Co. and Mirae Asset Securities Co.
The 58-year-old Park is best known for introducing the veteran financier to the country’s first mutual funds to retail investors here, and has since built a reputation in the field.
Market watchers expect this marriage to create a synergy effect, factoring in that Daewoo Securities has expertise in investment banking and retail services that will complement the overseas investment-wise Mirae Asset.
“Armed with our distinguished features, we will transform ourselves into a major investment bank to lead Asia’s financial market,” a Mirae Asset official said. In an e-mail message to his employees earlier this year, Mirae Asset chief Park stressed his commitment to expand the group’s market capitalization to 10 trillion won in three years.
The financial authorities also welcomed the deal.
“It is part of the government’s financial reform … and I expect the deal to have positive effects on the overall financial industry,” Financial Services Commission (FSC) Chairman Yim Jong-yong said.
Vowing continued efforts “to have market players leave state-run entities,” the chief said the government “will draw up a three-year plan to sell both financial and non-financial subsidiaries under KDB starting next year.”
Shares of Mirae Asset Securities Co. closed at 19,650 won on the Seoul bourse, up 1.03 percent from the previous session, outperforming the benchmark KOSPI’s 0.43 percent decline, while Daewoo Securities fell 0.49 percent to 10,200 won.