NH Investment & Securities challenged the integrated investment account (IMA) business, which is set to receive its first approval this year, shortly after KB Securities released an analysis report with negative content on it. With both companies being securities firms affiliated with financial holding companies, the report has drawn attention in the Yeouido securities sector as they compete in some corporate finance (IB) areas such as bond issuance.
On the 31st of last month, NH Investment & Securities announced that it would challenge the IMA business with the support of its largest shareholder, NongHyup Financial Group. It was decided to raise 650 billion won by allocating new shares to NongHyup Financial Group. If the capital increase is realized, NH Investment & Securities' equity capital will exceed 8 trillion won, meeting the application requirements for the IMA business. The financial authorities plan to designate the first IMA operator this year. So far, only Korea Investment & Securities and Mirae Asset Securities have met the requirements.
KB Securities released an analysis report just three hours after NH Investment & Securities made its decision on the capital increase. The key point of the unusually quick report was the uncertainty regarding the effective impact of NH Investment & Securities' capital increase for the IMA business. Kang Seung-geun, a researcher at KB Securities, noted that NH Investment & Securities has only utilized about 50% of its issuance limit, and it is still uncertain whether the profitability of the IMA will surpass that of the issuance.
KB Securities lowered its investment opinion on NH Investment & Securities from the previous 'buy' to 'hold' and adjusted the target price down to 20,500 won, a decrease of 8.9%. Following the announcement of NH Investment & Securities' capital increase, 13 securities firms released related reports, but only KB Securities and Hyundai Motor Securities lowered both their investment opinions and target prices. Among them, KB Securities presented the lowest target price.
Within the industry, various interpretations are emerging regarding the KB Securities report. Although there are some differences in equity capital size, it has been highlighted that both companies are affiliated with financial holding companies and are competing for the top two positions in the bond issuance sector.
A securities firm official said, "Looking at the equity capital size, it was expected that NH Investment & Securities and KB Securities would be the next to enter the IMA business after Korea Investment & Securities and Mirae Asset, but NH Investment & Securities has moved ahead faster than expected, making it unavoidable for KB Securities to be aware of this situation," adding, "It is no coincidence that KB Securities was the first to release a report after the announcement of NH Investment & Securities' IMA challenge."
Mirae Asset and Korea Investment & Securities already have equity capital exceeding 8 trillion won, while NH Investment & Securities stands third with over 7 trillion won. Samsung Securities and KB Securities follow behind, but Samsung Securities has not yet received approval for the issuance.
However, the company explained that the report released by the researcher does not represent the company's stance. A KB Securities official stated, "Analysts prioritize their independent analysis and expertise over their sense of belonging to the company, so they do not release reports considering the competitive situation among companies," adding, "Please see the report analysis as it is."