The role of investment banking (IB) at securities firms is changing. In the past, competitiveness was measured by how many deals each institutional sector handled, such as leading initial public offerings (IPOs) or arranging acquisition finance. Now, it is becoming more important to see how precisely they consolidate the funding needed at each growth stage of corporations, from pre-listing fundraising to IPOs and acquisition finance.
Vice President Kim Kwang-ok, who leads the IB Group at Korea Investment & Securities Co., shares the same concerns. Kim said that while traditional IB focused on winning and executing individual deals such as IPOs, acquisition finance, and corporate bond issuance, the future of IB is to first read corporations' funding needs at each growth stage and even design the matching financing structures. The idea is to evolve into a "platform-type IB" that broadens corporations' funding channels by consolidating Korea Investment & Securities Co.'s own capital with a network of institutional investors at home and abroad.
The changes are already taking shape through a reorganization. After returning to her "home base," Korea Investment & Securities Co., from KakaoBank late last year, Kim reorganized the corporate finance department within IB Division 1 into the "IPO and growth finance department." She also created a global acquisition finance department to target high-grade credit markets overseas, including Europe. The Hong Kong local subsidiary was also placed under IB to strengthen foreign currency funding and cross-border deal execution. The following is a Q&A.
— You returned to Korea Investment & Securities Co. after six years, having overseen IPOs and more at KakaoBank since 2020. How is your experience at KakaoBank influencing your leadership of the IB Group?
"My experience at KakaoBank was very helpful in broadening my view of customer needs from a financial platform perspective. While traditional IBs in the past focused on approaching and executing at the level of individual deals, the recent market demands a 'platform mindset' that organically consolidates customers' fundraising, investment, and medium- to long-term growth strategies.
In particular, the work style of technology platform corporations—data-driven decision-making, speed of execution, and customer-centric processes—is having a great impact on how the Korea Investment & Securities Co. IB Group is run today. Ultimately, IB must also evolve from a simple execution organization into a platform organization that is the first in the market to identify customer needs and consolidates them into a group-level comprehensive solution."
— You changed the names of Corporate Finance Departments 1–3 within IB Division 1 to "IPO & growth finance Departments 1–3." What changes are you seeing on the ground after the reorganization?
"The biggest change is that we now approach IPOs not as a simple listing event but from the perspective of supporting the entire corporate growth process. Whereas the past often saw short-term, listing-timed approaches, we now provide integrated solutions tailored to each growth stage of corporations, including pre-IPO investments and loans to unlisted corporations.
In practice, by building close relationships with corporations from the pre-listing stage, the stability of our deal pipeline has improved, and for corporations, it has become an opportunity to see Korea Investment & Securities Co. not just as a lead manager but as a long-term growth partner."
— What are the main targets of the newly established Global Acquisition Finance Department?
"The Global Acquisition Finance Department is focusing on overseas M&A acquisition finance, particularly high-grade credit deals centered on Europe. We are expanding opportunities around deals with stable cash flows and clear visibility on recovery. We are not stopping at simply deploying funds; we are also pursuing deal sourcing linked with our internal asset management group and even a sell-down structure targeting institutional investors at home and abroad.
In addition, we are reviewing the placement agent business (a consulting firm that connects fund managers and limited partners) that arises in the course of overseas acquisition finance, and we are strengthening a global IB platform capability based on credit, syndication, and institutional networks. We are proactively securing high-grade global assets and performing the role of consolidating them with the capital and investor network of Korea Investment & Securities Co."
— What synergies are you feeling after placing the Hong Kong local subsidiary under IB? If you have a strategy to compete with global major IBs in Asia's cross-border deal market, what is it?
"After placing the Hong Kong local subsidiary under IB, collaboration between the headquarters coverage organization and the overseas execution organization has accelerated dramatically. The Hong Kong subsidiary currently serves as the core execution platform for foreign currency funding for Korean corporations. We are strengthening sales and syndication capabilities centered on syndicated loans and KP bonds (foreign currency bonds issued by Korean-affiliated corporations), and recently we have been expanding into overseas acquisition finance.
The competitiveness of Korean-affiliated securities firms does not lie in competing with global major IBs on capital strength. Our distinctive strengths are our deep understanding of Korean corporations and our swift decision-making structure. Our clear differentiator is a niche strategy that most nimbly captures the needs of Korean corporations, structures them, and consolidates them with our Asia network."
— Korea Investment Holdings is pushing to acquire an insurer. If an insurer is actually brought in as a subsidiary, what changes will there be in deal sourcing or asset management strategies in the IB institutional sector?
"Insurers' assets have a clear characteristic: they are long-term, stability-focused funds. Therefore, from an IB perspective, we expect the biggest expansion in investment areas based on long-term credit products and stable cash flows.
Whereas a securities firm's own capital or issuance note funds have traditionally been relatively short-term in nature, securing insurance assets would make it possible to design much more long-duration investment structures. Accordingly, we will be able to further diversify structures across various alternative investment areas, including infrastructure, high-grade credit, and long-term acquisition finance."
— The characteristics and regulations differ for issuance-note and IMA funding, securities firms' own capital, and, going forward, insurers' assets. What are your principles for capital allocation?
"Because the nature of funds and regulatory regimes differ, the key will be precise capital allocation tailored to each asset's characteristics and recovery structure. Once guidelines are drawn up that match the objectives of each pool of funds, we will do our best to source the most suitable deals that meet them. Deals with strong short-term bridge loan characteristics or those requiring swift commitments will be handled based on securities firms' own capital, while assets that generate long-term stable cash flows will be securitized as products or matched with long-term funds in parallel."
— When the logic of deal-pushing by the sales (RM) organization clashes with checks by the risk management organization, how is the final decision made? If there are commonalities among deals that recently failed to pass the Investment Deliberation Committee, what are they?
"In IB, the most important value is ultimately a 'sustainable earnings structure.' No matter how large or attractive a deal appears, if recoverability and downside stability are not secured, it cannot be competitive in the long run.
In recent investment reviews, we are scrutinizing the stability of cash flows, clarity of recovery structures, and industry cycle risks far more strictly than simple valuation size. In particular, we take a conservative approach and decide to halt deals that rely on overly optimistic growth assumptions or have unclear recovery strategies. The final decision ultimately depends on how precisely we secure the balance between growth potential and downside stability."
— You are pushing to expand the organization amid industrywide departures of IPO talent in the second half. What type of talent is most needed at the Korea Investment & Securities Co. IB now?
"Both traditional execution capabilities and investment review capabilities are important. However, in today's market environment, it is not easy to differentiate among securities firms with traditional IPO execution skills alone. The most important talent to lead the market going forward is 'industry coverage–type talent' who can deeply understand industries and corporations and also design funding structures in a multidimensional way.
IPOs have also changed from simple listing execution tasks to one means that runs through corporations' growth strategies, so we are focusing on securing talent with a balanced mix of industry understanding, investment judgment, and structuring capabilities."
— What do you see as the biggest external variable that will determine the IB deal pipeline in the second half? Also, what areas is the Korea Investment & Securities Co. IB determined to deliver results in this year?
"In today's market, we see the direction of global interest rates and exchange rate volatility as the most sensitive variables. Movements in exchange rates and interest rates directly hit corporations' investment sentiment and funding costs. However, the higher the market uncertainty, the more the importance of structured finance tends to expand compared with a market focused solely on public offerings.
Due to intensifying global competition and trend shifts centered on AI, every corporation is grappling with survival and growth. The Korea Investment & Securities Co. IB aims to be a financial partner that shares these corporations' concerns and provides practical solutions. We will present preemptive alternatives to the market and raise our execution power for problem-solving to take a step forward."