Samsung Securities will acquire a stake in Dragon Capital, the largest asset management company in Vietnam, to accelerate its presence in the country rather than establishing a corporation, foreign newswire BusinessKorea has reported.

The move indicates that since the issuance of bills of lading, one of the main tasks of a large investment bank, was suspended in South Korea, Samsung Securities turned its eyes overseas so as not to lag behind its competitors.

According to securities industry and financial authorities on September 6, Samsung Securities will acquire Dragon Capital shares by partnering with Caldera Pacific, a Hong Kong-based private equity fund.

Samsung Securities and Caldera Pacific will jointly become the second-largest shareholder in Dragon Capital, with a 40 per cent holding. Caldera Pacific will be a general partner and Samsung Securities a limited partner.

Samsung Securities will own about 10 per cent of the stake, shelling out a considerable sum in the process.

A representative from Dragon Capital declined to confirm the news with VET.

Dragon Capital is the largest asset management company in Vietnam, with assets under management amounting to $900 million. It has also played a role as a bridgehead for capital from Hong Kong to enter Vietnam.

“The opening of an office or a corporation, a general overseas advancement form, takes a lot of time from the input of money to results,” an official familiar with the acquisition said. “But the takeover of a stake in a local asset management company allows a company to efficiently and effectively secure a sales network and infrastructure.”

Unlike Mirae Asset, the Shinhan Financial Group, and Korea Investment, which all set up corporations in the early stages of their operations in Vietnam, Samsung Securities has no bridgehead to Vietnam except for the strategic alliance forged with the Ho Chi Minh Securities Corp. (HSC) in March. Thus, market experts say that there is a possibility that Samsung Securities will additionally acquire stakes in other companies, with this investment just the beginning. 

Five South Korean securities firms - Mirae Asset Daewoo, NH Investment, Korea Investment and Securities, Golden Bridge, and Shinhan Financial Investment - have seven offices or corporations in Vietnam. Korea Investment & Securities increased its stake in EPS Securities in Vietnam to 98.2 per cent by investing an additional $39 million after launching KIS Vietnam and acquiring an initial 49 per cent stake.

KIS Vietnam, which hovers at around 70th among the Top 100 securities companies in Vietnam, increased its market share in the brokerage market by nearly 5 per cent from 0.25 per cent over the course of five years. NH Investment Securities entered Vietnam by establishing an office in Ho Chi Minh City in 2007. In 2009, it acquired a 49 per cent stake in Vietnam CBV, a local securities company. It is currently in negotiations with CBV to ramp up its stake to 100 per cent.

However, as external uncertainties increase and the overall overseas sales performances of South Korean securities companies are on a downward trend, financial authorities are paying attention to risk from overseas. Last year, brokerage firms’ overseas branches suffered a net loss of $4.5 million due to a spike in selling and administrative expenses related to losses on valuations under the equity method of accounting by some overseas branches and the provision of prime brokerage services (PBS). Large South Korean securities firms that made a foray into Vietnam have also targeted expanding new business items such as investment banking and prime brokerage services, breaking away from brokerage-oriented sales.