Kakao Pay seeks to beef up brokerage unit through capital injection

A cellphone screen shows the Kakao Pay mobile app / Courtesy of Kakao Pay

By Anna J. Park

Kakao Pay has injected a total of 18 billion won ($15.7 million) into Kakao Pay Securities, in a bid to support its brokerage unit's mobile trading system (MTS), slated for launch later this year.

For the capital injection, Kakao Pay secured the brokerage unit's newly issued 1.22 million shares priced at 14,706 won per share.

The total size of the capital increase this time was 30 billion won in total. As Kakao Pay holds 60 percent of Kakao Pay Securities' equity, it paid 60 percent of the capital increase, amounting to 18 billion won. The other major shareholders, including Shinhan Capital with a 36 percent stake, provided the remaining 12 billion won for the paid-in capital increase.

This was not the first time that Kakao Pay injected capital into its brokerage subsidiary. When Kakao Pay Securities raised 10 billion won of capital in March this year, Kakao Pay also took charge of paying 60 percent of the capital increase. Put together, Kakao Pay injected 24 billion won this year alone into its subsidiary. When considering capital injected last year ― nearly 20 billion won ― as well as the initial capital injection of 55.8 billion won a few years back, Kakao Pay has so far invested nearly 100 billion won into its brokerage subsidiary.

“The capital increase of this round was implemented in order to raise the necessary money to expand the scope of Kakao Pay Securities' service areas, including the MTS. Kakao Pay Securities is planning to launch its MTS program as early as later this year,” an official from Kakao Pay Securities told The Korea Times over the phone.

Kakao Pay Securities' logo

Kakao Pay Securities officially launched in February 2020 as a subsidiary of Kakao Pay, as the parent company acquired Baro Investment & Securities back in 2018, purchasing 60 percent of its shares from Shinan Capital. Kakao Pay Securities has now accumulated more than 4 million users, as of the end of the first half of this year. Currently, users can invest in various fund products through the platform, and actual mobile-based stock trading will kick off later this year.

As Kakao Pay is expected to make its stock market debut within the next month, its brokerage subsidiary's receiving of a stable capital injection is much more likely over the next few years to grow into a medium-sized broker company. According to Kakao Pay's plan, about 300 billion won of the money raised through the IPO will be spent on bolstering the capital of Kakao Pay Securities by 2023.