Kakao Pay CEO Ryu Young-joon speaks at a conference in November 2018. (Kakao Pay)
The Financial Services Commission, South Korea’s financial regulator, said Wednesday that it has approved fintech firm Kakao Pay’s request to become the largest shareholder of brokerage house Baro Investment & Securities.
With that final authorization, the fintech firm will be able to operate stock trading businesses on its own mobile platforms as well as those run by its parent firm, mobile messenger giant Kakao.
Last year the Kakao fintech spinoff submitted an application for preliminary approval to acquire 60 percent of the local brokerage firm, and the financial regulator granted temporary approval earlier this year. Kakao’s stake in Baro is estimated to be worth 40 billion won ($33.6 million)
“The regulator has reviewed three categories, including financial stability and debt status, and Kakao Pay passed the standards,” said the FSC in a press release.
Since it announced the acquisition plans in October 2018, the mobile payment company vowed to expand its business leverage to various investments and asset management by enabling stock trading within the mobile messenger service KakaoTalk.
The FSC screening process was halted for several months, however, as Kakao Chairman Kim Beom-su faced accusations of omitting a required statement on the status of the company’s affiliates. The process resumed in November last year after the high court cleared him of wrongdoing.
Under the Capital Market and Financial Investment Business Act, major shareholders of financial companies are required to have no record of any criminal penalty within the past five years for breaching financial laws.
Kakao Pay saw its quarterly transaction volume on its fintech platforms climb from 10.6 trillion won in January-March to 11.4 trillion won in April-June and 12.9 trillion in July-September last year. The company’s estimated transaction volume for this year is around 68 trillion won, according to eBest Investment & Securities, and should rise further upon the confirmed acquisition of Baro Investment.
By Kim Young-won (firstname.lastname@example.org