[Edaily Marketin Reporter LEE GEON-EOM ] Korea Investment & Securities has begun the process of winding down SF Credit Partners (SFCP), a leveraged buyout joint venture established with U.S.-based Stifel Financial, just three years and eight months after its launch. Analysts suggest that, given the business is currently profitable, this move is less a withdrawal due to poor performance and more a strategic effort to restructure its U.S. operations.

Board Approves Notice of Dissolution

According to a comprehensive report by E-Daily on the 10th, the board of directors of Korea Investment & Securities approved the “Motion to Issue

a Notice

of Dissolution for SF Credit Partners” on September 23, with all eight directors voting in favor. Following the notice of dissolution, SFCP is expected to cease new business operations and proceed with liquidation procedures to recover existing loans.

SFCP is a company engaged in acquisition financing and private debt lending targeting mid-sized U.S. companies. Private debt (PD) refers to non-bank financial institutions lending funds directly to companies without going through banks or the public bond market. SFCP has focused on providing financing for refinancing and mergers and acquisitions (M&A) in the middle market—a segment where participation by major banks is limited.

Korea Investment & Securities entered into a joint venture agreement with Stifel in September 2022 and launched SFCP in January of the following year. At the time of its launch, Korea Investment & Securities held a 75.1% stake, while Stifel held 24.9%. Subsequently, Woori Bank acquired a 10% stake, reducing Korea Investment & Securities’ stake to 65.1%.

At the time, Korea Investment & Securities agreed to acquire its stake in SFCP for 214.7 billion won and to make the investment in installments over five years via capital calls. The plan was to grow the capital, which stood at $39 million at launch, to approximately $200 million by 2028. Currently, the book value of Hantou Securities’ investment in SFCP stands at 99.6 billion won, which is about half of the originally planned investment amount (214.7 billion won). In effect, the company has begun the process of winding down SFCP even before completing its capital increase plan.

The decision to wind down SFCP is considered unusual because it was made despite improving financial performance. Although SFCP posted a net loss of 800 million won in 2023, its first year of operation, it returned to profitability the following year, recording operating revenue of 23.2 billion won and a net profit of 4.5 billion won. Net profit for the first half of this year also reached 4.5 billion won, roughly three times the figure for the same period last year (1.5 billion won).

Given that the dissolution of a joint venture typically occurs when losses accumulate or business viability declines, this suggests that factors other than poor performance influenced the decision to dissolve the company.

Headquarters Guarantee Extended

Prior to the dissolution notice, Hantou Securities also extended the term of the payment guarantee provided by its headquarters to SFCP. On August 20, the Hantou Securities board of directors approved a motion to extend the term of the payment guarantee for SFCP’s local borrowing.

A payment guarantee is a promise by a parent company to repay a subsidiary’s debt if the subsidiary is unable to do so. Industry observers interpret this as a measure to maintain local borrowing while SFCP recovers its loans. Since private loans are difficult to sell before maturity, borrowing must be maintained until loan recovery is complete. This means that even after dissolution, Hanwha Investment & Securities will have to bear the burden of the guarantee until loan recovery is complete.

Stifel, the joint venture partner, had previously established a separate private lending joint venture. In June 2024, Stifel founded “SBLA Private Credit,” a leveraged lending joint venture, with the U.S. asset management firm RoadAbitt. Since it provides loans to private equity fund (PEF) portfolio companies, its business scope overlaps with that of SFCP. It is unclear whether the dissolution was scheduled under the joint venture agreement or if either Hanwha Investment & Securities or Stifel initiated the dissolution.

However, there is speculation that Hantou Securities is not scaling back its U.S. operations as a whole. In addition to SFCP, Hantou Securities operates KIS US, a subsidiary dedicated to investment banking, and KIS America, a local subsidiary, both based in New York. Among these, KIS US specializes in local acquisition financing, and Hantou Securities has steadily increased its capital through capital increases. This means that even if SFCP is wound up, the company has a structure in place to continue its U.S. acquisition financing business centered on KIS US.

An official from Hantou Securities stated, “We are exploring various efficient measures to expand our presence in the U.S. market, but nothing has been decided yet,” adding, “This is completely unrelated to the recent conditions in the private lending market.”