MERITZ Securities has applied to the financial authorities for designation as a comprehensive financial investment business operator. If approved, it plans to concentrate funds on corporations and venture capital.
Kim Jong-min, the head of the corporate finance (IB) division at MERITZ Securities, noted on the 13th during a conference call following the announcement of second quarter (April to June) management results that the issued notes are short-term financial products issued with a maturity of less than one year and a yield promised to customers by the securities firm. The securities firm can invest the funds raised through issued notes in corporate finance and real estate project financing (PF) to earn profits.
Kim noted, "It is not appropriate to directly mention the possibility and timing of approval for the issued notes business as it is still at the initial review stage," and added that he would diligently engage in the review process to meet the requirements of the financial authorities.
He also stated, "As demonstrated by MERITZ's big deals with groups such as Lotte Group, Korea Zinc, Celltrion, and SK Group, we have timely provided solutions that meet the needs of corporate clients," adding that he has strong hope for approval of the issued notes, noting the capability and potential to contribute meaningfully to the activation of the capital market, which is the direction of the new government's policy.
Kim said that if the issued notes business is launched, it will provide stable products focused on retail clients. Although regulations require managing at least 50% of corporate finance assets and no more than 30% in real estate when operating issued notes, he emphasized that real estate exposure would be minimized while significantly expanding corporate finance and venture capital beyond the regulations.
Kim expressed expectations that through the issued notes business, MERITZ Securities would achieve diversification in its IB business. He mentioned, "Although it could vary depending on market conditions, we expect a funding rate around 3% and an operating rate around 4.5%, estimating an operational margin of about 1.5 percentage points from the issued notes."