[THE INVESTOR] Hanwha Investment & Securities, South Korea’s mid-sized brokerage house, is considering an acquisition of a bigger peer, the CEO of the firm said Aug. 17.

“Hanwha Investment is a small company which ranked No. 14 among local securities firms, but I think we can soon become a mega-sized brokerage,” Yeo Seung-Joo, who took office as CEO in February, said during a press conference held in Seoul. 

He said the firm will have a keen interest if a large local securities company was put up for sale, saying in a “merger between two small companies it is difficult to build significant synergies.”

His remark came as Korean brokerage houses have been pursuing aggressive acquisitions, including Mirae Asset Securities, which bought Daewoo Securities, and KB Financial Group, which took over Hyundai Securities.

The tie-ups were aimed at ambitions to morph into investment banks with the government’s drive to nurture the local capital market by allowing brokerage houses to tap into investment banking business.

To receive the government’s approval, securities firms need more than 3 trillion won (US$2.71 billion) in equity capital while Hanwha Investment has below 1 trillion won of capital.

Regarding a possible takeover of HI Investment & Securities, which has been seeking a potential buyer since earlier this year, Yeo said the company has “no interest at all.”

Before hunting for an acquisition target, the company needs to improve its balance sheet first.

Hanwha Investment reported a loss before tax of 189.4 billion won in the first half of year. The massive loss stemmed from its equity-linked securities products.

“Going straight to the bottom line, the ELS risk has been resolved,” Yeo said.

By Park Han-na (hnpark@heraldcorp.com)