BANGKOK -- After a six-year slump, KTB Securities Thailand jumped back into the black in 2016. And now, as the only South Korean financial subsidiary in Thailand, the brokerage is eyeing a listing in the Southeast Asian nation.
The secret behind the recent turnaround is localization efforts carried out by the parent group, South Korea’s KTB Investment & Securities.
KTBST CEO Win Udomrachtavanich (right) and CFO Kim Jung-kyu
“In the past, (KTBST) filled the top management with Koreans,” KTBST CEO Win Udomrachtavanich said in a recent interview with The Investor. “Trying to do business in the Korean way is very different. If I go to Korea, I cannot do business my way. We need to find a good partner.”
He was named CEO in June 2016, and under his leadership KTBST rolled out a new fixed-income product -- secured debentures, or debts with collateral. The company adopted pricing metrics for debt financing instruments partly inspired by Western banks, which enables investors to reap returns of about 7 percent.
The success of the new product led to recent pipeline diversification. According to the CEO, investment banking including debt financing accounts for nearly 40 percent of its revenue, followed by brokerage fees.
“In the past and up until now, most companies go to banks to borrow money,” he said. “Our job is to help companies tap into the capital market. It is our role to help their financing at a fair interest rate charge that fits investors.”
The Korean won-denominated net profit of KTBST came to 2.5 billion won ($2.1 million) in 2018, nearly double the 2017 level of 1.3 billion won and a tenfold increase over the 262 million won recorded in 2016, according to financial statements submitted to Korea’s Financial Supervisory Service.
This boosted KTBST’s efforts to file for an IPO on the main Thai bourse in January, a move designed to raise as much as $6.2 million.
It is expected to become the first IPO by a foreign-affiliated securities brokerage house in 14 years, the last one being Singapore-based UOB Kay Hian Securities in 2005. There are three more such foreign entities listed on the SET -- Japan’s Capital Nomura Securities, Taiwan-based KGI Securities and Malaysia’s Maybank Kim Eng Securities.
“There must be proven profits, sustainability of business and a business track record for a company to be listed on the Stock Exchange of Thailand,” the CEO said.
“Most of the securities don’t get listed because for securities houses there are many operational details. When you file for a listing, SET has to verify, inspect and audit all the processes, which is very cumbersome.”
According to CFO Kim Jung-kyu, who has been dispatched by KTB Investment & Securities, getting over this hurdle represents a quantum leap for a firm’s reputation, given that it is rare for Thai financial authorities to green light an IPO -- proceeds are a plus.
Officials said the IPO will strengthen the ongoing efforts to expand business across Southeast Asia. In addition to a partnership with Philippines-based investment house Unicapital Group in December 2018, KTBST aims to add Singapore-based Fullerton Asset Management and Shanghai-based Haitong International Securities to its pan-Asian network.
“It is about finding friends, good and small partners with a good business model, for product development and research,” Udomrachtavanich added.
The CEO holds a 13.7 percent stake in KTBST, down from the 31 percent he held before the IPO announcement. KTB Investment & Securities said it has not yet decided on selling its own shares to the public when KTBST goes public. KTB Investment & Securities owns a 70 percent stake in the firm.
This article is the result of collaboration between The Korea Herald and Antara. It was sponsored by the Korea Press Foundation.
By Son Ji-hyoung (firstname.lastname@example.org)