This article was published on April 24, 2025, at 4:37 p.m. on the ChosunBiz MoneyMove site.
DB Insurance has recently shocked the market by becoming the second-largest shareholder of DAOL Investment & Securities, leading to speculation about the intentions of DB.
Some speculate that DB Insurance may seek a hostile M&A rather than being satisfied with the second-largest shareholder position, but industry insiders generally agree that DB Insurance is a friendly shareholder of Lee Byung-cheol, chairman of DAOL Investment & Securities. For now, it is considered a white knight equity.
According to the financial investment industry on the 30th, DB Insurance announced on the 21st that it had newly acquired 5,923,990 shares of DAOL Investment & Securities. The acquisition was for general investment, and the ownership ratio is about 9.73%. The equity was originally held by Kim Ki-soo, the representative of Presto Investment Advisory. DB Insurance acquired this equity in a block deal, becoming the new second-largest shareholder.
What stands out is the price. The date of the after-hours trading was April 17, and the closing price on that day was 3,665 won. However, the trading price on both sides was higher at 3,900 won. Generally, block deals are sold at a discount to the current price, but the fact that a premium was paid suggests that DB may have ambitions for management control. Previously, Daemyung Sonogroup, which rose to become the second-largest shareholder of T'way Air through a block deal, also paid a premium for its equity, denying ambitions for management control at the time, but it later emerged that they indeed had ambitions.
DB Insurance claims that the purpose is for 'general investment,' but it is reasonable to believe that there is another strategic intent behind a major insurance company, which already has a subsidiary securities company (DB Securities), acquiring another securities company equity close to 10%.
Moreover, they disclosed that the purpose of holding equity is 'general investment,' but general investment is not merely a regular investment. Unlike simple investments, general investments have the right to make shareholder proposals, demand executive appointments, and request increased dividends under corporate law. In practice, activist funds often buy equities for general investment purposes, then later influence management.
As a result, some predict that the possibility of DB Insurance pursuing hostile M&A cannot be ruled out in the future. Since Chairman Lee Byung-cheol's ownership ratio is 24.98%, it can't be seen as stable yet, and for DB Insurance, acquiring another securities company would expand interest revenue and strengthen asset management capabilities.
However, currently, industry insiders interpret that it is appropriate to view DB Insurance as a white knight for Chairman Lee. Chairman Lee and former DB Group Chairman Kim Jun-ki are known to be alumni of Korea University and have reportedly maintained exchanges. It is highly likely that the acquisition of DAOL Investment & Securities equity by DB Insurance was carried out after prior communication between the two.
A financial investment industry source said, 'To acquire more than 10% of a securities company, DB Insurance would need to obtain prior approval from the Financial Services Commission under the Financial Activities Act, and it is unlikely that DB Insurance would go through that hassle to pursue hostile M&A.' They added, 'While there may be a possibility of further acquiring equity through mutual agreement if DAOL Investment & Securities needs funds in the future, that's a distant story for now.'
Meanwhile, DB Insurance can incorporate DAOL Investment & Securities as a subsidiary even if it holds less than 50% of its equity in the future. The Financial Holding Company Act stipulates that for a financial holding company's subsidiary to control a grandchild company, it must directly own more than 50%. However, DB Financial Group has not transitioned into a holding company structure, so this does not apply.