South Korean securities firms are speeding up capital expansion as they compete to enter integrated management accounts (IMA) and become comprehensive financial investment businesses. Funds secured this year, or being raised, through rights issues and hybrid capital securities issuance alone have topped 8.7 trillion won.

As of Oct. 19, 13 domestic securities firms have raised or are seeking to raise 8.705 trillion won this year through rights issues and hybrid capital securities, according to the financial investment industry.

That is about double last year’s total capital expansion of 4.374 trillion won. Of the total, rights issues account for 5.15 trillion won and hybrid capital securities for 3.555 trillion won.

KB Securities posted the biggest capital expansion. It completed a 700 billion won rights issue in February and a 1 trillion won rights issue in July, securing a total of 1.7 trillion won this year.

As a result, its equity capital increased to 7.9784 trillion won at end-June from 6.6928 trillion won at end-2025. Including the additional July capital increase, it will exceed the 8 trillion won threshold.

Korea Investment & Securities also received a 1.5 trillion won capital injection from parent Korea Financial Group earlier this year. On a standalone basis, its equity capital stood at 12.7085 trillion won at end-first quarter, the highest in the industry. Korea Investment & Securities is expanding corporate finance, venture capital investment and its IMA business based on the capital it secured.

Woori Investment & Securities received a 1 trillion won rights issue in April from Woori Financial Group. Its equity capital expanded to 2.2278 trillion won as of end-June. Woori Investment & Securities is seeking to enter the comprehensive financial investment business category, which requires at least 3 trillion won of equity capital, through additional capital expansion.

NH Investment & Securities issued 500 billion won worth of hybrid capital securities in March and completed a 400 billion won rights issue in June targeted at NH NongHyup Financial Group. It raised a total of 900 billion won, securing capital headroom needed to expand corporate finance and venture capital investment.

Hanwha Investment & Securities has recently joined the capital expansion line-up. It completed payment on Oct. 8 for a 500 billion won third-party allocated rights issue. Hanwha Asset Management subscribed to 250 billion won of common shares and Hanwha Life Insurance subscribed to 250 billion won of convertible preferred shares. It also plans to issue up to 400 billion won of hybrid capital securities within the year.

Reflecting the latest rights issue, Hanwha Investment & Securities' equity capital rises to 2.7674 trillion won on a simple calculation from 2.2674 trillion won at end-June. If it also completes the hybrid capital securities issuance, its accounting equity capital is expected to exceed 3 trillion won.

Behind securities firms' active push to expand capital is a structure in which the scope of business varies depending on the size of equity capital.

Under the current system, comprehensive financial investment businesses with at least 3 trillion won in equity capital have larger corporate credit provision limits than ordinary brokerages. Those with at least 4 trillion won can run a commercial paper issuance business after receiving separate approval. Those with at least 8 trillion won can also perform IMA operations. Meeting the equity capital threshold alone does not automatically grant business eligibility.

There are currently 3 IMA operators: Korea Investment & Securities, Mirae Asset Securities and NH Investment & Securities. KB Securities is seeking to enter as an additional IMA operator after lifting its equity capital to fourth in the industry through a large-scale rights issue this year.

Competition has also expanded in the commercial paper issuance market. Samsung Securities and Meritz Securities received short-term financing business licences in succession last month, lifting the number of commercial paper issuers to 9. Not only existing operators but also newly entered securities firms have joined the competition to secure corporate finance assets and investment funds.

Capital expansion methods also differ. Rights issues raise capital by issuing new shares, and are mainly used by securities firms affiliated with financial holding companies that can receive support from their parent groups. Hybrid capital securities, in contrast, can be recognised as capital for accounting purposes if certain requirements are met, while avoiding dilution from issuing common shares.

Hybrid capital securities, however, create an interest payment burden. Hana Securities issued $300 million (about 400 billion won) of foreign-currency hybrid capital securities on Sept. 30, the first among domestic securities firms. It raised funds on terms including a 30-year maturity and a 6.50 percent annual coupon rate, and plans to use them for global corporate finance and venture capital supply.

Signs are also emerging that the capital expansion race is leading to an actual increase in corporate finance supply. According to data released by the Financial Services Commission on Oct. 1, venture capital supply by 7 comprehensive financial investment businesses with a venture capital supply obligation totalled 11.6 trillion won in the second quarter, up 20.4 percent from the previous quarter.

The ratio of venture capital supply to funds raised through commercial paper issuance and IMA stood at 19.5 percent, above this year’s mandatory ratio of 10 percent. Financial authorities plan to raise the mandatory ratio in stages to 20 percent in 2027 and 25 percent in 2028.

An industry official said that as capital expansion continues, the focus of competition among securities firms is expected to shift from simply the size of equity capital to capital utilisation and profitability. The official said the importance of operational capability and risk management is growing because firms need to secure returns by managing funds raised through IMA and commercial paper issuance in areas such as corporate finance.