South Korea’s financial sector is poised for meaningful growth as Korea Investment & Securities and Mirae Asset securities have been authorized to launch innovative investment accounts (imas). The move, approved November 19 by the Securities and Futures Commission, is expected to unlock approximately $23 billion USD in new capital and reshape investment strategies within the country’s leading securities firms. This marks the first official designation allowing firms to operate IMAs despite the regulatory framework being established in 2017.
South Korean securities firms Korea Investment & Securities and Mirae Asset Securities are now cleared to launch innovative investment accounts (IMA), unlocking an estimated 30 trillion won (approximately $23 billion USD) in new capital raising opportunities. Both companies are rapidly reorganizing and developing new products, with the initial product launches expected to be a key battleground for market leadership.
On November 19, the Securities and Futures Commission, under the Financial Services Commission, approved the designation of the two firms as comprehensive financial investment businesses (comprehensive investment firms) with capital exceeding 8 trillion won.
IMAs allow securities firms to invest over 70% of client deposits in corporate finance and share any excess profits with customers. Because of this structure, which includes a guarantee of principal, the accounts require a high level of risk management capability. While the regulatory framework for IMAs was established in 2017, this marks the first time that firms have been officially designated to operate them.
With this designation, Korea Investment & Securities and Mirae Asset Securities can collectively raise capital up to 300% of their equity through a combination of IMAs and existing issuance of electronic bonds. Korea Investment & Securities, with equity of 12.219 trillion won as of the third quarter, could potentially raise up to approximately 26 trillion won.
The firm has already utilized 18.7 trillion won in electronic bond issuance, leaving limited additional capacity. The IMA designation is significant as it provides a new avenue for capital acquisition.
In September, Korea Investment & Securities established a 12-person IMA team within its asset management group. Yang Hae-man, a managing director, leads the new division, which is structured into an IMA investment department and an IMA investment strategy department to separate product development and strategic planning functions.
Korea Investment & Securities plans to launch its first IMA product next month, initially focusing on stable investment options before gradually expanding its portfolio. The strategy involves increasing exposure to traditional corporate finance areas like corporate loans and acquisition financing, while also incorporating some high-growth equity securities and global funds to enhance returns.
Kim Seong-hwan, CEO of Korea Investment & Securities, stated, “IMAs represent a turning point in providing customized asset management and stable investment opportunities to our clients. They will also contribute to the revitalization of corporate finance and the growth of the capital markets.”
Mirae Asset Securities has greater potential for capital expansion. Its equity stood at 10.3106 trillion won as of the third quarter, allowing it to raise approximately 31 trillion won through a combination of IMAs and electronic bond issuance. The firm has utilized 8.2634 trillion won in electronic bond issuance, representing a 40.07% issuance rate, leaving substantial room for growth.
Mirae Asset Securities also underwent an organizational restructuring in October, establishing an IMA headquarters in preparation for becoming an IMA operator. Trading Business Division Head and President Jeon Gyeong-nam will lead the new division. Jeon has held several leadership positions within Mirae Asset Securities, including head of the trading division, co-chief executive officer of management support, and head of the management support business division.
Mirae Asset Securities plans to begin with performance-linked dividend products and then expand its product line to include dividend-based and project-based offerings. The firm has not yet announced a specific launch date, but intends to introduce products “as soon as possible.”
Jeon stated, “In line with the purpose of IMAs, we will actively engage in supplying venture capital to contribute to a productive financial transformation. As a product based on the creditworthiness of a securities firm, we will provide reliable IMA products based on our global investment expertise and risk management capabilities.”
Given the structure of IMAs, which offers a principal-guaranteed structure capable of attracting funds from the banking sector, both firms are expected to accelerate the issuance of these accounts. The move comes as South Korean financial institutions seek new avenues for growth amid a competitive landscape.
ⓒ새로운 눈으로 시장을 바라봅니다. 딜사이트 무단전재 배포금지
