"Kimchi bonds, additional tier-1 capital securities, and ESG bonds were all new markets at the beginning. What matters is to be the first to move when change comes."
Korea's investment banking (IB) market is changing fast. As the interest-rate environment, investor demand, and corporations' funding methods shift, the role of securities firms is expanding. Rather than resting on past success, the ability to create new markets in step with change and respond to client demand now determines competitiveness, observers say.
In a recent interview with ChosunBiz, Ju Tae-young, vice president of KB Securities, said, "The capital market is constantly changing, and every time the market shifts, new opportunities emerge," adding, "In the end, competitiveness depends on how quickly you read and respond to change."
KB Securities is regarded as a house that has long led the domestic debt capital market (DCM). Whenever new products and structures have appeared in Korea's bond market—such as kimchi bonds, additional tier-1 capital securities, and ESG bonds—it has actively taken part in pioneering the market. Ju said, "Understanding and execution experience in new markets ultimately make the difference in IB competitiveness."
He said, "In the end, someone has to create a new market first," adding, "Designing the initial structure and establishing the system is hard, but once the market grows, that experience and know-how become a major asset."
Building on this strength, KB Securities is expanding results in areas such as the equity capital market (ECM) and mergers and acquisitions (M&A) advisory. Ju said, "What ultimately matters is not a specific product or sector, but how early you can build the market and financial structures clients need," adding, "KB Securities will continue to play a role in pioneering new markets."
The following is a Q&A with Ju.
― How do you view the recent environmental shifts surrounding the IB market?
"In the past, traditional capital-market work like corporate-bond issuance or IPOs was the core of IB. But now the financial solutions that corporations demand have become far more diverse. As industrial structures change, corporations' investment demand is also shifting. In many cases, simply issuing bonds or going public does not solve the problem. Demand for new products and new markets keeps emerging. IB's role is also changing in line with market shifts."
― What change do you see as most important in the current market?
"The speed of change has become much faster. In the past, a single market structure often lasted a long time, but not anymore. The interest-rate environment changes, and investors' preferences change. Industry trends keep evolving. What has become crucial is how quickly you can spot new opportunities whenever the market shifts. Clients also demand a much wider range of financial services than before. Competitiveness now depends on how quickly you can respond to those needs."
― Do you think the way competition works in IB is also changing?
"Yes. In the past, league-table rankings in specific sectors were the core of competitiveness; now it is becoming more important how broadly you can provide the financial services clients need. The ways corporations consider raising capital are also becoming more diverse. There are inherent limits to simple arranging capabilities. Because the financial services clients want keep changing, the capability to respond accordingly is becoming more important."
― How do you see the current funding environment for corporations?
"Uncertainty remains high. Interest rates, the economy, and industry conditions are all changing rapidly. For corporations, how to raise funds is becoming more important than simply raising them. That is because they must weigh both expense and risk. As a result, IB's role is expanding from simple arranging to designing optimal funding structures tailored to corporate situations."
― KB Securities has long been regarded as strong in DCM.
"For a long time, KB Securities has created a variety of new products and markets in the domestic bond market. Kimchi bonds, additional tier-1 capital securities, and ESG bonds were all new markets at first. In the end, someone has to create a new market first. You need to design the relevant structures, review regulations, and persuade investors. I believe KB Securities has moved relatively proactively in those areas. When a market grows, first movers ultimately accumulate the most experience and know-how. I think that experience is now translating into KB Securities' competitiveness."
― We heard KB Securities was active in the early days of the kimchi-bond market as well.
"When the kimchi-bond market began to take shape in earnest, KB Securities participated quite proactively. We did a lot of work to attract foreign investors to the domestic market and to build new structures. We also took the lead in bringing to market domestic issuances of kimchi bonds and Arirang bonds by Chinese corporations and other overseas issuers. When a new market is forming, execution experience is ultimately what matters most. As that experience accumulated, I believe it built the capability to respond quickly in other markets later on."
― Your business scope has widened considerably.
"It is true we once had a strong image in bonds, but now we are producing results across diverse areas such as IPOs and M&A advisory. We delivered solid results in the IPO market last year and are raising our profile in M&A advisory as well. Ultimately, that is because the services clients need are diversifying. It is hard to grow sustainably by excelling in just one field. From the client's perspective, we must provide comprehensive solutions."
― What do you see as KB Securities' unique strength?
"Adaptability to change. The capital market keeps shifting. At one time the corporate-bond market was key; at another, IPOs were key; and in another period, acquisition finance and structured finance grew. What matters is not a particular field but finding and responding first to the areas clients need whenever the market changes. I believe KB Securities has strength in that regard."
― What do you see as the most important competitiveness going forward?
"Responsiveness to change. There is no guarantee that formulas for past success will keep working. When new industries emerge and new financial demand arises, we must create structures and products to match. What matters is how quickly you can respond when a new market opens."
― What is the goal for KB Securities' IB going forward?
"It is important to be No. 1 in a particular field, but more important is building an organization that can continuously respond to market changes. We aim to keep strengthening the capability to move first when a new market opens and to be the first to provide the financial services clients need. Our goal is to remain an IB that can turn market change into opportunity."