According to an exclusive report by Metro Newspaper reporter Ahn Sangmi, Woori Financial Group is embarking on a merger and acquisition (M&A) of a securities firm that it has been pursuing for a long time. Their target is Korea Force Securities, which started as Funds Online Korea, was acquired by Korea Securities Finance in 2018, and is now for sale again. Woori Financial Group was interested in mid- to large-sized securities firms, but due to the lack of suitable buyers and the high price tag, the group opted for a new strategy: acquiring Korea Force Securities. This decision was made in light of the fact that Woori General Finance performs most of the duties of a securities firm, except for securities brokerage.
Woori Financial’s acquisition strategy and background
As of December 28, 2022, Woori Financial Holdings, through its subsidiary Woori Jonggeum, has begun preparations to acquire Force Securities. The company has already raised funds for M&A through a 500 billion won capital increase late last year. Acquiring a securities firm is a key task for Woori Financial, which is the only one of the five largest financial conglomerates – KB, Shinhan, Hana, and NH – that does not have a securities firm. Since taking office, Chairman Lim Jong-ryong has emphasized his intention to acquire a securities firm, and aims to strengthen the group’s capabilities and expand its non-banking portfolio to enter the securities industry.
Woori Financial’s Non-Banking Profit Ratio and Status of Force Securities
As of Q3 2022, Woori Financial’s non-bank profit share is 11%, with 90% dependence on banks. This compares to 60% for other large financial stocks. Force Securities was founded in 2013 as Fund Online Korea, which was funded by asset managers and securities-related organizations, but was acquired by Securities Finance when it went up for sale in 2018. However, the company has been losing money ever since and is in a slump.
Force Securities’ shareholding structure and the effect of Woori Jonggeum’s acquisition
As of the end of 2022, the main shareholding structure of Force Securities is Securities Finance as the largest shareholder at 51.7%, followed by fintech firm Pound at 28.6%. If Woori Bank successfully completes the acquisition of Force Securities, it will be able to leverage its comprehensive financial business license with a variety of services to explore new heights. With the strength of depositor protection applied to certificates of deposit and CMA custody, it has the opportunity to grow as Dongyang and Merits have done in the past.
Future Plans for Woori Jonggeum
Currently, Woori Bank is considering relocating its headquarters to Yeouido, which is located near Woori Bank in Jung-gu, Seoul. It’s a strategy that hopes to capitalize on the synergies of moving to an area with a high concentration of brokerage firms. Force Securities headquarters is also located in the Hi-Investment Building in Yeouido.
