DGB Financial acquires HI Investment

DGB Financial Group, a financial holdings unit based in Daegu, has become the new owner of HI Investment & Securities in a move that aims to expand the group’s non-banking business and increase its presence outside of its home turf in the center of the country.

A board meeting of the holding company on Wednesday approved the decision to buy an 85.3 percent stake in HI from Hyundai Heavy Industries.

Analysts believe that the deal is worth between 450 billion won ($404 million) and 470 billion won.

The acquisition will allow DGB to diversify its business portfolio and moderate dependence on its banking unit in terms of profit. The holding unit of affiliates such as DGB Daegu Bank, DGB Capital and DGB Asset Management lacked a brokerage operator.

The buyout of HI will also help the financial group to reach out to a larger client base outside of the North Gyeongsang area since the securities company has a branch network in South Gyeongsang.

“DGB may use HI Investment, which mostly operates in the South Gyeongsang area, to broaden its presence in the region. Sixteen out of 29 HI locations are operating in Busan, Ulsan, and South Gyeongsang,” said Choi Chung-uk, an analyst at Daishin Securities.

Choi also expected the deal to create synergies among the existing businesses.

“The company may also be able to attract corporate investment businesses (IPO, bonds issuance, etc.) from its existing corporate customers who tend to have high loyalty, while boosting the wealth management business by selling securities products to individual customers,” he said in a report.

DGB Financial Group and Hyundai Heavy Industries will sign a stock purchasing agreement today.

On the Hyundai side, the decision came as the group seeks to restructure by selling non-core assets and stakes in businesses that fall short of generating a major share of revenue for the group.

Under the direction, the shipbuilding group pushed forward an initial public offering of its shipbuilding affiliate Hyundai Samho Heavy Industries, raising 400 billion won.

In June the group also made an additional 350 billion won as Hyundai Mipo Dockyard sold its holding shares in Hyundai Robotics, the holding company of the group, to rid itself of a complicated cross-shareholding structure among affiliates.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]