This article was posted on the ChosunBiz MoneyMove (MM) site at 10:32 a.m. on Oct. 23, 2025.
Korea Investment Holdings (Korea Investment Holdings) has recently been actively entering price return swaps (PRS). It is reported to be striving to obtain the largest volume in a PRS transaction secured by equity in a Doosan subsidiary.
This expansion of PRS aligns with the direction Korea Investment Holdings has been pursuing. Korea Investment Holdings is currently exploring multiple ways to expand its book business. The idea is not to stop at earning fees but to operate more of its own capital to maximize profits. Its effort to acquire an insurer is also part of efforts to expand its book business.
According to the investment banking industry, Korea Investment Holdings is discussing putting in 300 billion won on its own into a Doosan Robotics equity-collateralized PRS whose total size is around 700 billion to 800 billion won. A senior executive at a securities firm said, "There are talks that Korea Investment Holdings will take 300 billion won worth and other large securities firms will take about 100 billion won each."
Earlier, Korea Investment Holdings reportedly considered putting up to 600 billion won into the LG Energy Solution equity-collateralized PRS decided on Oct. 1. In addition, Korea Investment Holdings is said to be positively reviewing a 660 billion won PRS for LOTTE Chemical. Last November, LOTTE Chemical used a 40% stake in its U.S. subsidiary LOTTE Chemical Louisiana LCC (LCLA) as the underlying asset to sign a PRS contract with Meritz Securities, but it is having difficulty negotiating renewal terms with Meritz. Not only Meritz but other large securities firms have expressed reluctance, saying their exposure to the LOTTE Group is nearly at the limit, but it is reported that Korea Investment Holdings is the only one saying it can do it.
This expansion of PRS runs parallel to the goals Korea Investment Holdings has been pursuing. An IB industry official said, "Chairman Kim Nam-gu and President Kim Seong-hwan realized there are limits to fee businesses alone and are expanding the book business."
The idea is that when a firm exposes its own capital to risk and manages it, profits and losses are reflected directly rather than just earning fees from agency trading or ECM and DCM, allowing revenue to be maximized.
A PRS is basically a derivative contract in which a securities firm puts in its own capital to guarantee a stock price return. If the underlying asset's share price rises, the securities firm records an unrealized gain. Fees and hedging gains are also recognized separately in this structure.
Korea Investment Holdings' active attempt to acquire an insurer is similar in context. Korea Investment Holdings is reportedly reviewing every life insurer and non-life insurer currently on the market.
Insurers basically hold vast assets under management (AUM) and take a structure of stable investment income based on long-term liabilities. If a securities firm acquires an insurer, the group-level AUM expands and the securities firm can manage the insurer's bond and alternative investment operations. When the insurer's net worth is reflected on a consolidated basis, the size of the book itself expands.
A representative example is Meritz Financial's business model. Meritz Financial operates in a structure where property and securities move together. Securities structure or manage an insurer's alternative investment portfolio, achieving own capital management, fee revenue, and investment income simultaneously.
Therefore, when Meritz recently made a trillions-of-won-level investment in SK Innovation and SK On, it was able to shoulder a significant portion with internal funds. Of a 2 trillion won price return swap (PRS), 600 billion won was internal funding, and among 3 trillion won of convertible preferred shares (CPS), Meritz affiliates took on 400 billion won. Meritz was responsible for a total of 1 trillion won.