Hecto Financial Announces 50% Free Capital Increase with Treasury Share Cancellation Effect, Accelerating Shareholder Value Enhancement

Hecto Financial announced on the 10th that it has decided to carry out a free capital increase, allocating 0.5 new shares per existing share, with the aim of expanding capital for new business initiatives and enhancing shareholder value.

This free capital increase will provide shareholders with new shares equivalent to 50% of their current holdings at no cost, delivering an effect similar to a stock dividend. The new shares will be distributed to shareholders on record as of July 25, and the listing date for the new shares is scheduled for August 19.

According to the company, the decision to proceed with this free capital increase not only aims to enhance shareholder value, but also serves a strategic purpose of securing in advance the capital requirements needed for future entry into electronic finance and digital asset-related businesses.

In particular, this free capital increase will result in the cancellation of approximately 140,000 treasury shares, which, based on the previous day's closing price, amounts to about 3.6 billion KRW. Since treasury shares held by the company are excluded from the allocation of new shares, the proportion of treasury shares will decrease from the previous 4.4% to 1.4%. Accordingly, the ownership percentage of existing shareholders will rise proportionally.

Choi Jongwon, CEO of Hecto Financial, stated, "The primary purpose of the free capital increase is to expand capital in line with our growth as a global fintech company and our need for capital in electronic finance and digital asset businesses. The second purpose is to continue our shareholder value enhancement policy, which we have strengthened since last year." He added, "In addition to the treasury share cancellation effect, the increased liquidity will create a more attractive environment for institutional investors, which we expect will ultimately lead to greater shareholder value."

The company established a four-year shareholder return policy last year, setting the minimum dividend payout at 21% of separate net income and aiming to increase the payout ratio by at least 1 percentage point each year, with a goal of achieving over 25%. The company explained that the decision for this free capital increase is an extension of these shareholder-friendly policies.

Currently, the company’s total number of issued shares is about 9.45 million, which was relatively low in terms of market float. After the free capital increase, the total is expected to rise to approximately 13.97 million shares, contributing to increased liquidity.