This article was published on April 24, 2025, at 5:29 p.m. on the ChosunBiz MoneyMove website.
The financial authorities have suspended the eligibility review of KCGI's major shareholder at Hanyang Securities due to a special tax audit; however, OK Financial Group, a key investor in the KCGI fund, is actually increasing its points of contact with Hanyang.
This situation is one where Hanyang Academy, experiencing liquidity issues due to an inability to cash out Hanyang Securities, is borrowing funds.
OK Financial Group wanted to acquire Hanyang Securities, but since it would not pass the major shareholder eligibility review, it had sought to push through the acquisition in collaboration with KCGI. Employees at Hanyang Securities, which is in a position to be sold due to the liquidity crisis of the largest shareholder, are not pleased with the heightened presence of OK Financial, which has a strong image of lend.
◇ OK Financial expands influence by lending to Hanyang Academy
On the 17th of this month, Hanyang Academy signed a loan agreement for 45 billion won with OK Capital, a subsidiary of OK Financial, through its affiliate, Korea Publishing, under the condition of a six-month maturity, providing 22.35% of Hanyang Securities' equity as collateral. Specifically, shares held by related parties of Hanyang Academy, such as Baek Nam-kwan (10.85%), HBDC (7.45%), and Chairman Kim Jong-ryang (4.05%), were put up as collateral. The interest rate is 8.5% per annum.
The 11.29% equity held by Hanyang Academy was removed from the collateral. Instead, OK Capital placed a drag-along right on the equity of Hanyang Academy. If the default of the maturity right occurs in the future, OK Capital can sell a total of 33.64% equity of Hanyang Academy and related parties to a third party at once.
OK Capital did not set a subordinated or junior collateral on the shares (22.35%) related to Hanyang Academy. This means that OK Capital secured a position where it can control the sale of shares as the sole collateral provider.
The loan contract also included a clause for an additional charge favorable to OK Financial. OK Capital and Korea Publishing agreed to add 1.0 percentage point to the interest rate if Hanyang Academy fails to secure approval from the Ministry of Education for the sale of Hanyang Securities' equity by July 18 of this year, and after two months, the additional charge will increase to 1.5 percentage points. This is a mechanism to ensure that Hanyang Academy does not delay the sale of its shares.
OK Financial is reportedly responsible for about 60% (105 billion won) of the total investment of 170 billion won in the fund being raised for the acquisition of Hanyang Securities by KCGI. In addition to the investment, OK Financial will also invest 50 billion won in senior acquisition financing. This is why there has been continuous evaluation that OK Financial is the actual acquirer while KCGI plays a face-saving role.
◇ The image of a lender remains... Hanyang Securities employees are distressed
It is not a recent development that OK Financial has shown its intention to enter the securities business. In 2017, it was selected as the preferred negotiator for Ebest Investment & Securities (now LS Securities). However, it ultimately failed to acquire due to opposition from the financial authorities, who viewed its business structure, centered on lend, unfavorably. In this attempt to acquire Hanyang Securities, OK Financial reportedly attempted to specify a right of first refusal in the shareholders' agreement with KCGI, but abandoned this due to concerns over the authorities' scrutiny.
In this situation, the Seoul Regional Tax Service, known as the 'grim reaper of corporations,' has commenced a special tax audit against KCGI. An industry source in financial investment noted, 'For OK Financial, which has liquidated its lending business to enter the comprehensive financial stage, it would need a weapon to respond to this unexpected variable,' and added, 'It seems that KCGI has created a mechanism to exert influence in preparation for a potential failure in acquiring Hanyang Securities.'
In relation to this, a senior official from KCGI stated, 'Shouldn't the seller's plan for capital utilization not be hindered due to our issue (the tax audit)?' They added, 'It's a matter of providing necessary assistance between the seller and buyer, and we are maintaining good communication with Hanyang Academy as the preferred negotiator.'
As OK Financial, which had been quietly moving behind KCGI, revealed its presence, the mood among Hanyang Securities employees is not good. Although OK Financial has withdrawn from the lending market, its negative image still lingers in the public perception. One employee at Hanyang Securities said, 'I wonder how urgently the largest shareholder (Hanyang Academy) needs money to be dragged along like this,' and added, 'I had pride in working at a small but strong securities firm, but this is disheartening.'