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
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.