Hanyang Securities Foundation Faces Financial Difficulties, Put Up for Sale
Massive Emergence of Potential Securities Firm Sales Due to PF Defaults
The Hanyang Academy, which operates Hanyang University, has officially announced its plan to sell Hanyang Securities, but the market response has been lukewarm.
On the 15th, Hanyang Securities disclosed that its largest shareholder, Hanyang Academy, is pursuing the sale of its shares.
Hanyang Securities is a small to mid-sized securities firm ranked around 30th domestically based on equity capital. It is regarded as a securities company with strengths in corporate finance (IB) and bond sectors. Last year, its operating profit was 46.29475 billion KRW, and net income was 35.10417 billion KRW.
The largest shareholder, Hanyang Academy, held a 16.29% stake in common shares as of the end of March. Including related parties, the stake rises to 40.99%.
Considering Hanyang Securities’ market capitalization and management control premium, the industry estimates the sale price to be around 100 billion KRW.
It is known that Hanyang Academy is pushing for the sale of Hanyang Securities to supply liquidity to its affiliated construction company Hanyang Industrial Development and Hanyang University Hospital.
Hanyang Academy posted a net loss of 49.619 billion KRW last year due to a real estate project financing (PF) default crisis.
In the investment banking (IB) industry, companies such as KCGI, LX Group, and Woori Financial Group have been mentioned as potential buyers interested in acquiring Hanyang Securities.
Kang Sung-bu Fund 'Interest'... Flood of Potential Securities Sales 'Variable'
The Kang Sung-bu Fund (KCGI) has expressed interest in acquiring securities firms. However, the recent defaults in project financing (PF) and the abundance of potential securities sales besides Hanyang Securities pose variables. Securities firms mentioned as potential sales include SK Securities, SI Securities, and Leading Investment & Securities.
An IB industry insider explained, "Several securities companies are quietly on the market. Sellers want to sell, but there is no buyer interest."
Since the Legoland incident at the end of 2022, the burden of provisioning due to real estate PF defaults has increased, worsening the performance of securities firms with a large proportion of real estate PF business.
The credit rating industry is concerned that from the second quarter, the performance deterioration of capital companies and small to mid-sized securities firms may accelerate.
Some small to mid-sized securities firms have already turned to losses in the first quarter. According to NICE Credit Rating, SK Securities posted a net loss of 13 billion KRW, and Hi Investment & Securities posted a net loss of 6.4 billion KRW in the first quarter.
Experts expect this trend to strengthen if the burden of provisioning increases from the second quarter following the financial authorities’ implementation of a soft landing plan for real estate PF, advising that monitoring is necessary due to uncertainties.
Meanwhile, Woori Financial Group, LX Group, and others have denied rumors of pursuing the acquisition of Hanyang Securities through media interviews, calling them "groundless."
The last securities M&A before Woori Financial Group’s acquisition of Korea Post Securities in May was six years ago. In 2018, SK Securities, Hi Investment & Securities, and Baro Investment & Securities (now Kakao Pay Securities) were sold consecutively.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
