NH Investment & Securities will carry out a rights offering worth 400 billion won to expand its integrated investment account (IMA) business and strengthen competitiveness in corporate finance.
NH Investment & Securities said on the 2nd that it decided on a third-party allotment rights offering worth 400 billion won to NH Nonghyup Financial Group, its largest shareholder.
The funds raised through this offering will be used to reinforce the capital base for expanding investments in the IMA business, corporate finance, and venture capital. NH Investment & Securities explained that to fully expand the IMA business, which has recently been drawing heightened investor interest, it needs sufficient capital capacity and to secure financial soundness.
The IMA is a business in which a securities firm manages client funds in areas such as corporate finance and venture capital while being required to have the capacity to repay more than principal, demanding a high level of equity capital and soundness. As of the first quarter of this year, NH Investment & Securities' net capital ratio (NCR) was 159.3%, a relatively low level compared with major large securities firms.
Once the offering is completed, NH Investment & Securities' standalone equity capital will expand to about 9 trillion won. Accordingly, its capacity to operate the IMA and issuance bill businesses is also expected to grow.
There is also a goal of responding to the recently surging demand for margin trading. NH Investment & Securities reached its credit extension limit last month and suspended some credit extension services. Because the credit extension limit is linked to the size of equity capital, the capacity to provide related services is expected to expand once capital is raised.
This rights offering will proceed with participation by NH Nonghyup Financial Group, the largest shareholder. The issue price for the new shares was set at 31,100 won per share, determined without a discount to the reference price.
Chief Executive Yoon Byung-woon of NH Investment & Securities said, "This rights offering is a strategic decision to secure competitiveness in future growth businesses, beyond a short-term capital increase," adding, "We will make every effort to use the secured capital efficiently to enhance profitability and corporate value, and ultimately to improve shareholder value."