OK Capital has emerged as a major player in the stock market. Over the past two months, it has purchased 230 billion won worth of listed company stocks. Considering that the sale price of KDB Life Insurance was estimated at 200 billion won, this means that it has injected enough funds into the stock market to acquire a small insurance company in just two months.
Between June and July, OK Capital made 12 disclosures regarding 'borrowing funds from related parties' and 'acquisition of stocks from related parties.' The disclosures indicated that OK Capital received funding from its affiliate companies within OK Financial Group and included details about its stock investment process.
During the two-month period, OK Capital borrowed 160 billion won from OK Holdings Lending and 150 billion won from OK FN&I Lending. It acquired 0.1% to 1.9% equity stakes in six financial holding companies, including KB Financial Group and Shinhan Financial Group. Among securities firms, it acquired stakes of 3.96% in LS SECURITIES and 0.02% in Meriz Financial Group. Among general companies, it bought equity in LG (0.06%), OCI Holdings (2%), SEBANG (0.68%), and Sebang Global Battery (0.5%). The total acquisition amount is approximately 230 billion won.
What is the reason behind OK Capital's aggressive push into stock investments? At the core of this strategy is the fact that key affiliates of OK Financial Group are experiencing poor performance, and they are seeking to find a breakthrough through stock investments.
OK Savings Bank, a core affiliate of the group, recorded a net profit of 11.4 billion won in the first quarter of this year, which represents a decrease of 23.6% compared to the same period last year. The delinquency rate is also at 9.08%, which is higher than the average for the savings bank industry. This was primarily due to the impact of non-performing real estate project financing.
The situation for OK Capital, the second-largest affiliate in the group, is not favorable, but it is somewhat different from that of OK Savings Bank. OK Capital achieved a net profit of 18.8 billion won in the first quarter, successfully turning around from its previous losses. Last year, it recorded an annual net loss of 442.1 billion won due to the effects of non-performing real estate project financing but was able to turn to a profit immediately.
At that time, OK Capital explained that it reduced interest expenses by repaying borrowing funds and improved its performance due to factors such as gains from the disposal of securities and reversals of loan loss provisions. In fact, in the first quarter, OK Capital's profit and loss related to financial products increased from 2.5 billion won to 11.3 billion won. While stock investments did not play a decisive role in improving performance, they certainly contributed to some extent.
From OK Financial Group's perspective, there is a need to turn to the stock market to improve performance; however, OK Savings Bank is currently unable to engage in stock investments. Until now, OK Savings Bank has increased its revenue through investments in financial holdings such as JB Financial and iM Financial. Therefore, according to the 'Savings Bank Act,' which restricts the total value of held stocks to not exceed 50% of its own capital, it has become unable to make additional investments.
OK Next and OK Holdings, key affiliates within the group, are primarily focused on mergers and acquisitions (M&A) for investments, making it a common view in the industry that they have relatively little financial capacity to invest in securities.
Some interpret this as an investment aimed at securing profitability for the owner family, including Choi Yoon, chairman of OK Financial. Currently, Chairman Choi Yoon (5.72%), along with his children Choi Sun (5.15%) and Choi Hye-ja (5.15%), are listed among the top five shareholders of OK Capital. OK Holdings Lending (64.25%) and Exin Housing (7.44%) are the primary shareholders of OK Capital, with Chairman Choi also being the largest shareholder with a 58% stake in OK Holdings Lending. Exin Housing, a specialized real estate leasing company, has Chairman Choi serving as a non-executive director. Essentially, Chairman Choi's family has a controlling influence over OK Capital.
Questions are being raised in the financial sector regarding whether OK Capital is making stock investments on behalf of the owner family using funds lent from related companies.
An official from OK Capital stated, "We are investing in securities with the aim of diversifying our portfolio," adding, "When assessed internally, we primarily invested in stocks that are relatively undervalued at the moment."