According to the investment banking (IB) industry on the 8th, Sh Suhyup Bank has signed a memorandum of understanding (MOU) with the Sangsangin Group to acquire Sangsangin Securities and has begun due diligence. Suhyup Bank will hold exclusive negotiating rights through the third quarter while conducting due diligence on Sangsangin Securities. Having selected Samil PwC and Kim & Chang as advisors, Shinhan Bank plans to complete the due diligence by the third quarter of this year and sign a share purchase agreement (SPA) by the end of the year.
The sale targets approximately 65% of the controlling stake held by Chairman Yoo Jun-won’s family and related parties, including the 55.85% stake in Sangsangin Securities held by Sangsangin Group. The expected sale price is projected to be around 200 billion won. Following news of the NH Fisheries Cooperative’s acquisition plans, Sangsangin Securities’ stock price hit the daily upper limit the previous day, bringing its market capitalization to 130.3 billion won. The 200 billion won price represents a premium of approximately 50% based on that market capitalization.
Solid Business Foundation… Evaluated as a “Prime Acquisition Target”
Although SangSangIn Securities is a small-to-medium-sized brokerage firm, it is regarded as a prime acquisition target due to its solid business network spanning from investment banking (IB) to retail. Although it posted a net loss in the 50 billion won range in 2024, it successfully returned to profitability in the first half of this year with a net profit of approximately 10 billion won, and an annual profit is also highly likely. From the perspective of the National Agricultural Cooperative Federation (NACF), which is strengthening its non-banking portfolio with the goal of transitioning to a financial holding company by 2030, this is also an attractive acquisition target.
Some market observers are comparing this transaction to Woori Financial Group’s acquisition of Korea POS Securities. This is because Woori Financial and the NH Fisheries Cooperative are the only two cases in which a financial holding company has directly acquired a securities firm to enter the securities industry. While Woori Financial saved on cash outlay by acquiring POS Securities—which had a weak business foundation—through a merger, it has since injected substantial additional funds to establish a solid business foundation following the acquisition.
In contrast, since acquiring Golden Bridge Securities in 2019, SangSangIn Securities has strengthened its core infrastructure as a securities firm, including investments in investment banking (IB), corporate sales, retail bonds, and the reorganization of its mobile trading system (MTS). Analysts suggest that, from the Suhyup perspective, this is not an asset that requires post-acquisition investments in system development and staffing, but rather the acquisition of a fully operational securities firm capable of generating revenue immediately upon acquisition.
Unlike the savings banks that were forced to sell
Initially, Sangangin Securities was not subject to the authorities’ order to sell its shares. The sale was initiated in 2023 when the Financial Services Commission ordered Sangangin to dispose of more than 90% of its stakes in two savings bank affiliates due to issues with the major shareholder’s eligibility; last year, the KBI Group acquired Sangangin Savings Bank.
Under the Mutual Savings Banks Act, the eligibility of major shareholders of savings banks is reviewed every two years, and financial authorities order the sale of shares whenever grounds for ineligibility arise. In contrast, under the Financial Companies Governance Act, orders to revoke major shareholder eligibility and dispose of shares are issued only when a final conviction has been confirmed within the past five years. Chairman Yoo Jun-won, currently the largest shareholder of Sangangin, is in the midst of an appeal following a first-instance verdict on charges including capital-free M&A (mergers and acquisitions) loans and market manipulation; a final, confirmed verdict has not yet been issued.
Analysts also note that the timing of the sale is optimal. Since the sale of the savings bank was pursued following an order from the authorities, Sang Sang In, as the seller, found it difficult to take the lead. However, the situation is different for the securities firm. With the stability of the asset as a sale target and the scarcity of securities firm licenses coming to the fore, it appears a premium higher than the current market capitalization could be applied.
An industry insider in the investment banking sector commented, “From Sang Sang In Group’s perspective, they are following a strategy of first putting out the immediate fire by winding down the savings bank, then selling the profitable securities firm—which has returned to profitability—at its true value to secure liquidity,” adding, “This is a pragmatic choice that prevents the transfer of legal risks to major shareholders while reaping the tangible benefits of restructuring.”
