OK Financial eyes brokerage acquisition after insurance deal

OK Financial Group is stepping up efforts to diversify its financial businesses, with a potential securities brokerage acquisition emerging as its next target following a deal to acquire a non-life insurer and a name change at its holding company.

The group, which surrendered its moneylending license in October 2023 as part of its transition toward a comprehensive financial services group, has moved closer to that goal three years later through its planned acquisition of YeByeol Non-Life Insurance.

It has also renamed OK Holdings Loan, the company that effectively serves as its holding company, to OK Holdings, removing a reference to its moneylending origins.

According to industry sources on Wednesday, OK Financial approved the name change at an extraordinary shareholders’ meeting held Tuesday.

OK Holdings is 58.21 percent owned by OK Financial Chairman Choi Yoon and 40.26 percent by affiliate OK Next.

Although the company no longer operates a moneylending business, it has continued to provide financing and control major group affiliates, while retaining a name associated with its former operations.

Industry sources said the name change was accelerated by the group’s growing need to improve its corporate image as it pursues the acquisition of YeByeol Non-Life Insurance and participates in the bidding process for the JoongAng Ilbo newspaper.

OK Financial is currently conducting due diligence for the JoongAng Ilbo acquisition through OK Holdings.

The group’s roots trace back to the moneylending business. It entered South Korea’s financial market in 2004 by acquiring Japanese-affiliated lender A&O International and launching Rush & Cash, before expanding through a series of mergers and acquisitions.

In 2014, it entered the savings bank industry by acquiring Yenarae Savings Bank through Apro Service Group, the predecessor of OK Holdings.

Two years later, it acquired Citigroup Capital Korea, which subsequently became OK Capital.

More recently, affiliate OK Next signed a definitive agreement to acquire YeByeol Non-Life Insurance.

If completed, the acquisition would add insurance operations to a business portfolio currently centered on savings banking and consumer finance, advancing the group’s ambitions to become a comprehensive financial services provider.

Industry observers believe the insurance deal could also serve as a stepping stone toward entering the securities brokerage industry.

“Acquiring a securities firm has long been one of Chairman Choi’s ambitions,” an industry official said. “The group may also have considered that taking over YeByeol, which has been a challenge for financial regulators, could work in its favor when seeking regulatory approval for a future brokerage acquisition.”

OK Financial has repeatedly expressed interest in acquiring securities firms.

It previously pursued acquisitions of LIG Investment & Securities, Leading Investment & Securities and eBEST Investment & Securities, and also participated in the bidding process for Hanyang Securities.

The group has also strengthened its position as a shareholder in several financial holding companies.

As of the end of last month, OK Financial held a 6.48 percent stake in BNK Financial Group and a 9.02 percent stake in JB Financial Group.

It is also the largest shareholder of iM Financial Group, with a 9.99 percent stake, although it maintains that the holdings are purely for investment purposes.

The group’s financial resources could support further acquisitions.

OK Next, which handles the group’s M&A activities, had retained earnings of approximately 2.9 trillion won ($2.16 billion) at the end of last year, suggesting it could pursue additional deals even after investing in YeByeol Non-Life Insurance.

Meanwhile, OK Savings Bank’s net profit rose to 229.1 billion won in the first half of this year, compared with 165.9 billion won for the whole of last year.

The stronger earnings have increased its dividend capacity, potentially providing additional funding for the group’s acquisition strategy.

“We continue to review potential acquisitions of securities firms and asset management companies,” an OK Financial official said. “As for JoongAng Ilbo, we will continue participating diligently in the due diligence process until a preferred bidder is selected.”