DS Investment Securities' plan to make DS Asset Management a 100% subsidiary has been delayed for more than a month. DS Securities was set to establish a financial holding company structure through a stock exchange with DS Asset Management. But approval from the financial authorities is taking longer than expected.
Accordingly, DS Securities' plan to build a financial group structure and use it as a springboard for growth has also hit some snags.
According to the investment banking industry on 14th, the stock exchange between DS Securities and DS Asset Management, which had been scheduled for Sep. 1, has not yet received approval from the financial authorities.
In May, DS Securities held the second extraordinary shareholders' meeting and approved a proposal to conduct a comprehensive stock exchange with DS Asset Management and acquire 100% equity. DS Securities would receive all 904,000 shares held by DS Asset Management's shareholders and exchange them for DS Securities shares. The stock exchange ratio was set at 1 to 305.3085271. The DS Securities shares to be exchanged for DS Asset Management shares were to be secured through a paid-in capital increase by issuing new shares.
In the industry, the integration plan of DS Securities and DS Asset Management was assessed as the first step toward becoming a financial group. Although the two companies share the English company name "DS," they are essentially separate companies. Previously, Jang Deok-su, chair of DS Asset Management, acquired management control of DS Securities in 2021 through the private equity fund DS Private Equity. With this stock exchange, Chair Jang planned to secure 48% equity in DS Securities to become the largest shareholder and build a vertically integrated structure centered on DS Securities and DS Asset Management.
However, as approval from the authorities has been delayed, the scheduled stock exchange has not taken place. Equity exchanges involving investment firms require approval from the Financial Services Commission, but it is understood that the agenda has not been addressed at recent commission meetings.
A DS Securities official said, "We have already applied to the Financial Services Commission for approval of the stock exchange, but the decision appears to be delayed," adding, "We expect approval from the authorities within this year."
With the stock exchange delayed, DS Securities' preparations to establish a financial holding company structure are also expected to be pushed back for the time being. For this stock exchange, DS Securities planned to carry out a paid-in capital increase to expand its capital from the existing 112.1 billion won to 290 billion won. The industry expected DS Securities to pursue business expansion through a larger scale and vertical integration.
While the stock exchange is delayed, changes are also appearing in Chair Jang's equity ratio. Jang Deok-su, the largest shareholder of DS Asset Management, recently acquired 11,500 shares of DS Asset Management held by DSN Partners, raising his stake from 87.61% to 88.88%. However, because the increase in equity is not large, it is unlikely to significantly affect Chair Jang's equity ratio after the stock exchange.
An official in the investment banking industry said, "Given that DS Securities is at a stage where it can even look ahead to a listing after this stock exchange, this stock exchange is likely to be an important inflection point for the future business environment," adding, "However, Chair Jang's additional acquisition of DS Asset Management equity appears to be a transfer of equity intended to clearly sort out equity relationships."