SEOUL, KOREA, February 12, – In the first financing of its kind in Korea, the International Finance Corporation has approved a financing package of US$20 million to South Korean securities brokerage firm, Ssangyong Investment and Securities Company, Ltd. (SISCO), to help it restructure and streamline its operations.
Importantly, the project involves the delinking of SISCO from a conglomerate or chaebol. Until September 1998, SISCO's parent group was Korea's sixth largest chaebol, the Ssangyong Group. The project demonstrates that foreign investors can spin off parts of a chaebol by taking a controlling stake within a comprehensive restructuring plan approved by Korean authorities.
SISCO's new controlling shareholders, headed by Hambrecht & Quist Asia Pacific (H&QAP), expect to substantially improve operating policies and procedures and raise disclosure and transparency levels to global standards. The project should contribute to the government's goals of reforming the entire securities brokerage industry by instituting minimum capital adequacy requirements and improving corporate governance according to international best practices.
IFC Vice President for Investment Operations Mr. Jemal-ud-din Kassum said that the project would help mobilize additional financing to complete SISCO's recapitalization plan and stimulate further foreign capital inflows into the Korean securities brokerage industry. The restructuring of SISCO is also likely to increase market confidence and be viewed as a model of corporate restructuring, he added.
IFC's financing to SISCO consists of KRW6.25 billion (US$5 million) in subordinated convertible bonds and US$15 million in subordinated debt for IFC's own account.
SISCO, founded in 1973 and taken over by Ssangyong Group in 1984, is one of the largest securities companies in Korea with a nation-wide network of 66 branches. It is engaged in securities brokerage, corporate finance, securities trading, and other financial services, including the distribution of mutual funds and unit trusts.
H&QAP, headquartered in San Francisco, is a leading private equity firm focusing on the Asia-Pacific region. The company operates a network of 10 offices located in San Francisco, Bangkok, Beijing, Hong Kong, Jakarta, Kuala Lumpur, Manila, Singapore, Taipei, and Seoul.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.
