Woori Investment & Securities Emerges as Acquisition Finance Powerhouse, Maximizing Synergy Effects

Acquisition Finance Performance Up 400% Year-on-Year in H1

"Synergy with Woori Bank"

Accelerating Growth Backed by Capital Strength

The scale of acquisition finance achieved by Woori Investment & Securities during the first half of this year surpassed 1 trillion won. This figure represents an increase of nearly 400% compared to the previous year, with synergy effects among affiliates under the full support of Woori Financial Group driving this growth. As acquisition finance is emerging as a high-quality product to replace real estate project financing (PF), Woori Investment & Securities' growth, backed by strong capital, is expected to accelerate further.

Acquisition Finance Performance Surpasses 1 Trillion Won... Refinancing Nearly Doubled

According to the investment banking (IB) industry on July 21, the acquisition finance performance of Woori Investment & Securities, including refinancing, reached 1.0396 trillion won in the first half of this year. This marks a 389% increase from 212.6 billion won in the first half of last year. The number of deals also rose from 4 to 8.

Specifically, the amount of new acquisition finance came to 774.7 billion won. Woori Investment & Securities participated as a co-arranger in three large-scale deals, each exceeding 500 billion won. First, in the transaction where STIC Investments acquired CleanTopia, Woori Investment & Securities joined forces with Korea Investment & Securities, Shinhan Bank, and Woori Bank to arrange 40 billion won. In the case of Hong Kong-based private equity fund manager Gaw Capital's acquisition of the waste treatment company Koentec, Woori Investment & Securities handled 140 billion won out of a 520 billion won acquisition finance package. For the acquisition of Ulsan GPS and SK Multi Utility by STIC Alternative Asset Management and Korea Investment PE, Woori Investment & Securities co-arranged 500 billion won out of a total of 900 billion won alongside Korea Investment & Securities. In this deal, Woori Investment & Securities also independently arranged a short-term acquisition finance package worth 94.7 billion won.

A representative from Woori Investment & Securities particularly highlighted that the Ulsan GPS transaction was made possible by a close network with STIC and Korea Investment PE. This deal is the company's largest acquisition finance transaction since its establishment, reaching 600 billion won. The representative added that Woori Investment & Securities participated in every stage of the deal by providing an equity bridge loan (EBL) from the bidding phase, stating, "Based on a deep understanding of deal structure and the characteristics of the business, we were able to support the entire process, including acquisition finance."

For refinancing, Woori Investment & Securities arranged 264.9 billion won in the first half of this year, an increase of 186% from the 92.5 billion won achieved in the same period last year. In the refinancing case related to JB Financial Group by Align Partners, Woori Investment & Securities arranged 100 billion won out of a total of 350 billion won. Additionally, the company arranged refinancing independently for Jinhan Food (a portfolio company of Daol PE), The Players GC (Factum PE), and Heesung Chemical (Eden Partners and MC Partners).

Synergy Between Affiliates and Favorable Market Conditions

The industry attributes Woori Investment & Securities' rapid growth to the synergy effect among Woori Financial Group affiliates. Woori Investment & Securities was established in August 2024 through the merger of Woori Finance and Korea Post Securities. The Koentec case is considered a representative example of this synergy. Woori Bank and Woori Investment & Securities are known to have collaborated from initial structuring to deal closing. A representative at Woori Investment & Securities said, "Even under tight deadlines, organic collaboration among affiliates enhanced both the speed and completeness of the deal, which was key in securing the final lead arrangement rights."

Market conditions were also favorable. As funding rates have risen compared to the previous year, banks and securities firms with strong capital are gaining prominence in the acquisition finance market. An investment banking industry insider said, "While the difference between acquisition finance rates and funding rates is 10 percentage points in the U.S., it is only 5% in Korea. In a situation where the margin cannot be large due to the small rate difference, banks and securities firms that can raise funds at low costs have an advantage."

'High-Quality Product' Acquisition Finance Leads to Fierce Competition... Financial Holding Company Affiliates Have the Edge

Competition in the acquisition finance market is expected to intensify. This is because acquisition finance is recognized in the market as a high-quality product to replace real estate PF. An industry representative explained, "Acquisition finance is a high-quality product in a market where you can have the entire company as collateral and only have credit bonds, and it is replacing the role of traditional PF." As interest rates rise, the trend of 'chicken game' among competitors is also expected to strengthen, further intensifying competition. Previously, during a period of rate hikes, financial companies would raise lending rates faster than funding rates to secure net interest margins, but now, while funding rates are increasing, required returns are generally falling. As competition intensifies in areas such as productive finance, the interest rates that can be demanded from borrowers are actually decreasing. Another IB industry insider analyzed, "Financial holding company affiliates with strong capital will have an edge." In fact, in April, Woori Investment & Securities executed a capital increase worth 1 trillion won. Additionally, in the first half of the year, other financial holding company affiliates such as KB Securities (1.7 trillion won), Korea Investment & Securities (1.5 trillion won), and NH Investment & Securities (400 billion won) also carried out capital increases.

This content was produced with the assistance of AI translation services.