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South Korean brokerage houses eye Vietnamese market

KB, Samsung to acquire stakes in local firms, drawn by growth potential

Ho Chi Minh city stock exchange, the largest bourse in Vietnam, which accounts for more than 80% of the country’s listed stock. (Photo by Kim Dung Tong)

SEOUL -- South Korean brokerage houses are entering the Vietnamese market by acquiring local players, attracted by the Southeast Asian country's booming stock market.

KB Securities, a subsidiary of KB Financial Group, agreed to buy a 99% stake in Vietnam's Maritime Securities from local shareholders this month. The acquisition, worth some 756 billion dong or about 37.8 billion won ($33 million), is expected to close in two weeks' time, according to sources with direct knowledge of the deal.

"The deal is almost completed. KB is waiting for the final approval from the Vietnamese authorities," said an industry source who requested anonymity.

KB declined to comment on the deal, but admitted it had been interested in security firms based in Southeast Asia since earlier this year. KB is a mid-sized brokerage house in South Korea. 

In the brokerage sector, Maritime, one of 74 brokers in Vietnam, accounted for 3.5% market share of the Hanoi bourse last year and 1.7% at Ho Chi Minh City bourse. At the beginning of this year, Maritime registered to list shares on the Hanoi bourse but in the end withdrew and negotiated the sale of shares to investors. 

Five South Korean securities firms -- Mirae Asset Daewoo, NH Investment, Korea Investment and Securities, Golden Bridge and Shinhan Financial Investment -- have already entered the Vietnamese market by opening up offices and carrying out merger and acquisition activity. Three of these have set up their own local units: Mirae Asset Viet Nam, KIS Viet Nam and Shinhan Viet Nam.

Samsung Securities said it was planning to invest in Dragon Capital, Vietnam's largest asset manager, through an overseas fund.

"We have invested in a foreign fund as part of our portfolio. And the fund is considering investing in Dragon Capital," said Eom Se-won, a Samsung spokesperson.

Dragon is a leading asset manager in the country, with $900 million of assets under management. Dragon said it would sell its 40% stake worth $123.7 million to Caldera Pacific, a Hong Kong-based private equity firm, and to Samsung Securities. Samsung is expected to hold 10% in Dragon.

Analysts said that Vietnam was an attractive destination for South Korean security firms thanks to its growth potential. Vietnam's total stock market capitalization was $111 billion, or 56% of gross domestic product, in July.

"Vietnam's stock market is not mature yet, offering many business chances for South Korean companies," said Park Hye-jin, an analyst at Kyobo Securities. "They can have additional profits by offering infrastructure for the country."

Nguyen Quang Thuan, chairman and CEO of Stoxplus, a financial information provider in Vietnam, said that South Korean investors could take advantage of their country's free trade agreement with Vietnam. They are making aggressive attempts to engage local consumers, especially young people, following the start made by South Korean groups Lotte and CJ, which have led rising consumption trends in the country.

Vietnamese experts said that the recent rise in tension with North Korea was one of the reasons luring South Korean investors to markets beyond the Korean Peninsula.

According to Stoxplus, foreign indirect investment in Vietnam in the first nine months of 2017 reached $1 billion, with the majority coming from South Korean investors who were focusing on stocks and bonds.

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