S.Korea’s top securities firms enjoy high returns on fintech investment

South Korea’s startups raked in a record amount of investment last year, thanks to the number of unicorns reaching an all-time high.

This was not only great news for the startup ecosystem but also for securities firms.

Three securities firms in particular received trillions of won returns on their investment, namely: Korea Investment Holdings which owns Korea Investment & Securities Co.; Hanwha Investment & Securities Co.; and Mirae Asset Securities.

Korea Investment Holdings has a 27.31% stake in KakaoBank Corp. according to industry insiders on Thursday. That makes the financial conglomerate the second-largest shareholder of the fintech arm of Kakao Corp.

The parent company has a 4.01% stake or 19,050 shares in KakaoBank while Korea Investment & Securities has a 23.3% stake or 110.48 million shares. 

Korea Investment made the first round of investment in KakaoBank in 2016 with 174 billion won ($142 million). Since then, it made additional investments in 2017 and 2018 with 290 billion won and 186 billion won respectively. In 2020, it injected 167.6 billion won into the mobile banking app operator. 

All in all, Korea Investment poured 817.6 billion won into KakaoBank.

As KakaoBank’s market capitalization is around 23 trillion won, Korea Investment Holdings’ equity is valued at around 4.3 trillion won. The profit valuation from the KakaoBank investment exceeds 4.5 trillion won. 

Hanwha Investment, for its part, realized 1 trillion won in profit by investing in Dunamu Inc., the operator of Korea’s largest cryptocurrency exchange Upbit.

Hanwha purchased a 6.14% stake (2.06 million shares) in the digital assets company for 58.2 billion won in February 2021. 

Dunamu’s market capitalization stands at 15.5 trillion won. Upbit’s value surged 15 times recently on the back of the rising price of Bitcoin. 

Last December, Dunamu announced its accumulated third-quarter net profit came in at 1.99 trillion won.

Hanwha’s equity value in Dunamu also snowballed to 926 billion won – nearing the securities company’s market capitalization of 1.7 trillion won. 

The securities firm has been on a buying spree of fintech companies since 2020 as part of its efforts to increase the digital portion of its portfolio.

Hanwha has a 10% stake (11 million shares) in South Korea's third internet-only Toss Bank. It first acquired a 7.5% stake in Toss for 7.5 billion won in 2020 and made an additional investment of 47.5 billion won in Q4 2021.

Toss Bank is estimated to be valued at above five trillion won. 

Mirae Asset enjoyed hefty returns on Naver Corp. 

The securities firm formed a strategic alliance with the internet juggernaut in 2017. In a show of good faith, the companies exchanged 500 billion won worth of shares. 

At the time of exchange, Mirae Asset acquired 1.72% of Naver Corp. When Naver’s share prices rose rapidly during the pandemic, Mirae’s equity value also increased to 929 billion won. The marginal profit from evaluation stands at 430 billion won. 

Write to Ui-Myung Park at uimyung@hankyung.com
Jee Abbey Lee edited this article.