This article was published on Sept. 5, 2025, at 10:03 a.m. on ChosunBiz MoneyMove site.
Korea Investment Holdings increased the issuance size of its hybrid capital securities from 250 billion won to 450 billion won. This was thanks to the successful demand forecast aimed at institutional investors. Korea Investment Holdings plans to invest 900 billion won in its wholly-owned subsidiary Korea Investment & Securities, which has also alleviated the burden of the regulatory benchmark 'double leverage ratio.'
Korea Investment Holdings announced that it has finalized the issuance size of its hybrid capital securities at 450 billion won. The good result of 519 billion won in valid orders from the previously conducted demand forecast was a contributing factor. The desired interest rate band suggested by Korea Investment Holdings was 4.3% to 4.8%, but it was set at 4.4%. The hybrid capital securities have a maturity of 30 years, but early redemption is possible starting five years from the issuance date, depending on the call option.
Korea Investment Holdings will use all funds raised through the hybrid capital securities for a capital increase of Korea Investment & Securities. Korea Investment & Securities is currently promoting a shareholder allocation capital increase to raise 900 billion won by issuing 18,000 new shares at 50 million won per share. Korea Investment Holdings is expected to fully invest, securing half of the required funds through the hybrid capital securities.
In particular, Korea Investment Holdings has lessened the burden of the double leverage ratio. The double leverage ratio refers to the ratio of the money invested by the financial holding company in its subsidiaries (book value) to the total capital. Financial authorities regulate that financial holding companies must maintain a double leverage ratio of less than 130% for financial soundness.
Korea Investment Holdings had a double leverage ratio of 123.2% as of the end of June this year. As Korea Investment Holdings injects 900 billion won, the numerator of the double leverage ratio calculation increases, making it important to see how much the denominator, total capital, increases. Hybrid capital securities are recognized as capital in accounting as they possess characteristics of both stocks and bonds.
If Korea Investment Holdings had raised only 250 billion won through the hybrid capital securities, the interest leverage ratio would be estimated at 129.6%. This suggests that support for other affiliates might be tight, nearing regulatory standards. However, with the issuance size of the hybrid capital securities increasing to 450 billion won, it has secured a defense at an interest leverage ratio of 127%, lower than the 127.8% at the end of last year.
Korea Investment Holdings has been providing continuous support to Korea Investment & Securities. It injected 300 billion won in December 2024 and, following the acquisition of 700 billion won hybrid capital securities issued by Korea Investment & Securities in March this year, has invested a total of 1.9 trillion won over the past year through this capital increase.
Korea Investment & Securities plans to strengthen its financial soundness through the capital increase and aims to pursue more diverse revenue-generating businesses. As its capital increases, it can also expand its issuance business.
The market interprets this as groundwork for the approval of Korea Investment & Securities' Investment Management Account (IMA) business. The self-capital standard for the IMA business is 8 trillion won, but Korea Investment & Securities is expected to exceed 11 trillion won by the end of this month and 12 trillion won by the end of the year.
Currently, Korea Investment & Securities and Mirae Asset Securities have applied for IMA business approval, and NH Investment & Securities also plans to apply within this month.