Can Mirae Asset juggernaut be stopped?

Chairman Park on a streak making one international deal after another

By Kim Da-ye

In the world of finance, controlled by such juggernauts as Goldman Sachs and Nomura Securities, Mirae Asset Financial Group Chairman Park Hyeon-joo is trying to throw down the gauntlet.

So far, Park, one of the best-known self-made men in the Korean financial sector, is making modest advances not in New York or London but on the periphery of the global financial map.

Not that he is satisfied with being in the minor leagues. As a matter of fact, he travels widely with U.S. and European cities often on his itinerary.

Park, already having built his financial empire, is determined to expand outside Korea. Park’s determination is often taken note of by market watchers as his biggest asset.

“The reason for recommending investors to buy stocks of Mirae Asset Securities is the founders’ firm determination to go global,” David Rhee, an analyst at Hyundai Securities, said.

“Their goal is to foster its overseas business larger than the domestic one, and it’s Mirae’s charm that the founders in their early 50s would consistently maintain the target for the next 10 years.”

Already, Mirae’s private equity fund has ensnared the acquisition of Titleist, the U.S. golf ball maker, with more financial deals being cut under his leadership. “Park’s long-term vision is being fleshed out,” Park’s aide told The Korea Times.

Mirae’s strategy is branching out its asset management arm first and expanding the rest of the business including the brokerage house upon the foundation.

Under the plan, it acquired a 60 percent stake in a Taiwanese asset management company in January and an 85 percent share in Canada’s largest asset managing firm specializing in exchange-traded fund (ETF) in July.

The purchase of Taiwan Life (TLG) Asset Management is known to have cost some 11.5 billion won while the firm spent 140 billion won to buy the Canadian BetaPro Management that has 70 ETFs listed on the Toronto Stock Exchange.

It also has offices in the U.S., the U.K, Hong Kong, India, Singapore, Vietnam, Shanghai and Brazil.

According to Mirae Asset Financial Group’s officials, most of Chairman Park’s time is spent travelling abroad searching for more businesses to acquire.

Considering the current deals, the market doesn’t know if they were good ones.

Buying financial firms carry more risks than mergers and acquisitions (M&As) in the manufacturing sector because their most important asset is the talent who could walk out of the company at any time unlike machinery.

Acquiring and developing further a foreign firm could be even more challenging because of cultural differences between management and the employees.

Early signs are optimistic and predict the expansion could pay off. The brokerage house’s Brazilian unit in particular has recently been under the spotlight as it is quickly accumulating clients.

“It is expanding its customer base faster than expected by targeting online trading and setting the fee at 2.9 Brazilian real (2,000 won) ― about a half of the previous lowest,” Ahn Jung-gyun, an analyst of SK Securities, said.

Ahn added that Brazil has a very low infiltration rate ― some 620,000 stock accounts for the population of 200 million ― and Mirae Asset’s home trading system is superior to those of the local brokerage houses with real-time information and faster servers.

Hyundai’s Lee said that Mirae Asset Securities has a 0.5 percent of market share in Brazil ― an impressive figure for a fledgling firm.

If the figure reaches 3 percent, meaning the firm will be among the top 10 brokerage houses, the Brazilian branch’s income before tax could reach around 90 billion won ― which is absent in other securities firms’ balance sheets.

“Going global means more than the aggregated value of all overseas branches.

There is profit from the network as the firm can mediate trading among countries and develop new financial products,” Lee said.

He explained that a firm with one market has one opportunity for a product, with two markets, two opportunities, and with six, thirty opportunities.

“That’s the fourth dimension wall that a local business cannot pass over,” Lee said.