INTERVIEW Woori eyes additional M&A to spur growth after relaunch
Woori Investment Securities President and CEO Nam Ki-cheon speaks during an interview with The Korea Times at his office in Seoul's financial district of Yeouido, July 29. The interview took place to mark the firm's relaunch, Aug. 1, after a 10-year hiatus. Korea Times photo by Choi Won-suk
Woori Investment Securities is open to an additional M&A opportunity, most likely to secure a new, larger pool of financial assets deposited by clients, after it re-entered the industry following a 10-year hiatus, according to President and CEO Nam Ki-cheon.
During an interview with The Korea Times last week to mark the company’s relaunch, Nam expressed hope to carry out the M&A in the next two or three years to catch up with competitors fast and become an industry leader in the next 10 years.
Accordingly, he broke down goals concerning the firm’s areas of business into actionable steps, such as joining a top 10 brokerage house as well as emerging as a mega-sized investment bank.
“We’re thinking over an additional M&A so that we can supplement business resources that are highly demanded but can’t foster in a short period of time,” Nam said, adding “Financial assets deposited by customers possibly tops the list of these resources.”
The CEO’s remark came as Woori Investment Securities was relaunched, Aug. 1, after its predecessor was acquired by NH NongHyup Financial Group in 2014.
The acquisition was led by Yim Jong-yong, who now serves as chairman of Woori Financial Group.
Named after its predecessor, Woori Investment Securities, it returned through a merger between Woori Investment Bank and Korea Foss Securities.
An affiliate of Woori Financial Group, the medium-sized company is ranked 18th in the industry with 1.1 trillion won ($802.9 million) in equity capital.
To spur growth, Woori Investment Securities is capitalizing on all possible resources from the parent company in addition to the ones from Woori Investment Bank and Korea Foss Securities.
“The support from the group will certainly help create synergy, but it is quite a different matter when it comes to efforts to secure financial assets deposited by clients,” Nam said.
He was referring to Woori Financial Group being Korea’s only banking group without a brokerage arm before Woori Investment Securities’ relaunch and thus having little access to relevant customers.
The deposited assets Nam referred to range from stocks to bonds, funds, mutual funds and other investment products that are mainly or exclusively dealt by the securities firms.
Woori Investment Securities President and CEO Nam Ki-cheon, second from right, is joined by Woori Financial Group Chairman Yim Jong-yong, second from left, and other guests from the group during a cake-cutting ceremony to commemorate Woori Investment Securities' relaunch at its headquarters in Yeouido, Seoul, Aug. 1. Yonhap
Concerning possible candidates to combine with, the CEO flatly denied speculation that Woori Investment Securities is interested in Hanyang Securities, a medium-sized company.
“Hanyang Securities, as far as I understand, is not highly competitive with regard to deposited assets,” he said.
With regard to equity capital, Nam wants to increase the amount to 3 trillion won in five years and then to 5 trillion won in 10 years.
The company also plans to form a joint fund worth 2 trillion won with Woori Bank and other group affiliates to invest in blue chip project financing (PF) deals.
It will also push to secure 30,000 high-net-worth individuals in two years by using the network of 20 million customers of the group.
Furthermore, the firm is working on a balanced business model across its retail, sales and trading (S&T), investment banking and other related sectors.
Regarding investment banking, it also plans to bolster participation in private equity, venture capital and initial public offering (IPO).
“All these efforts are parts of goals to become a top 10-ranked brokerage house and a mega-sized investment bank in the next 10 years,” Nam said.
Woori Investment Securities President and CEO Nam Ki-cheon waves the company's flag during a ceremony for its relaunch at its headquarters in Yeouido, Seoul, Aug. 1. Yonhap
Such efforts, according to the CEO, are also essential to cope with what he described as the third wave of the evolution in the securities industry.
The third wave is noteworthy for a greater reliance on digital technology, following the first wave that relied heavily on retail trading.
The second wave was noteworthy for polarization in the industry, with some firms successfully shifting to investment banking to reap far more profits and grow bigger whereas others still remained in retail trading and settled with smaller profits.
Asked about Woori Investment Securities’ competence in the third wave, Nam pointed out Korea Foss Securities was an online-only brokerage house and offers services through a mobile platform instead of physical branches.
“Korea Foss Securities’ business operation gives us an advantage over competitors, in a way we can accelerate digital transition at a faster pace,” Nam said, noting it is anticipated to require time for the offline-based securities firms to undergo an operational overhaul.
The CEO thinks Woori Investment Securities’ roadmap faithfully serves Woori Financial Group’s push to expand its non-banking business portfolio.
Of the group affiliates, Woori Bank accounts for about 90 percent of total sales and profits. Such uneven income, according to Nam, negatively affects investor sentiment toward the group.
“In that regard, Woori Investment Securities wants to bolster its share in the group’s sales and profits as fast as we can and contribute to balanced growth,” he said.