[Newsmaker] Mirae Asset to shake up brokerage industry

In South Korea where many family-run conglomerates hold the whip hand over much of the economy, the self-made billionaire Park Hyeon-joo’s bold step to create the country’s biggest brokerage has come into the spotlight after his successful bid to acquire KDB Daewoo Securities. 

When a consortium of Mirae Asset Securities and Mirae Asset Global Investments was chosen as the preferred bidder to take over the country’s second-largest brokerage house Daewoo Securities on Dec. 24, Mirae Asset Financial Group chairman Park came a step closer to heading an 8 trillion won ($6.83 billion) behemoth.

“We will combine the strong points of Mirae Asset and Daewoo Securities to develop into a global investment bank that represents Asia,” Park said in a statement.

Mirae Asset offered around 2.4 trillion won for a 43 percent stake in Daewoo Securities and 100 percent of a small asset management firm to take them over from state-run Korea Development Bank.

Market insiders said Park’s strong willingness to win the deal was reflected in Mirae’s proposed price, which was far higher than the market value estimated at 1.78 trillion won and that offered by other bidders.

“Buying Daewoo Securities means the same as purchasing Korea’s capital market to me because the company can reshuffle the capital market,” he said.

The merger between the two firms is expected to create an overwhelming new leader in Korea’s fragmented brokerage sector. The current leader is NH Investment & Securities, with total assets of 4.4 trillion won.

Park, 57, who made a fortune starting from scratch as an ordinary office worker, founded Mirae Asset Investment Advisory and a venture capital affiliate with some 1 billion won of seed money in the rubble of the Asian financial crisis in 1997.

Then he launched the country’s first closed-end mutual fund the following year, along with an asset-management company. It was only about a decade after he entered the securities industry in 1986 when he started working at a stock firm.

Mirae Asset Group provides comprehensive financial services including wealth management and life insurance.

His ambition to turn the group into Asia’s leading investment bank was a lifetime goal as noted in his autobiography published in 2007.

“My goal is to foster Mirae Asset Group as Asia’s No. 1 investment bank to compete with Morgan Stanley, Merrill Lynch and Goldman Sachs,” he wrote in the book.

Currently, Japan’s Nomura Securities is Asia’s largest investment bank with equity of around 24 trillion won.

Regarding the potential synergies from the tie-up, Park said that insurance, overseas and alternative investment business could be expanded by cross-selling each firm’s products at 183 branches. Mirae and Daewoo run 75 and 105 branches, respectively.

“Basically, it’s the marriage between the country’s No. 1 asset management firm, Mirae Asset Global Investments, and the biggest brokerage, Daewoo Securities. I made an investment to create ‘1+1=3’ not ‘1+1=2,’” he said in a recent interview.

By Park Han-na (hnpark@heraldcorp.com)