[THE INVESTOR] Mirae Asset Capital announced on Sept. 5 that it has decided to increase capital by 250 billion won (US$226.26 million).

The financing arm of Mirae Asset Financial Group will issue 7,302,254 shares at 34,236 won per share and offer to its affiliate Mirae Asset Global Investments.

This is in accordance with the Specialized Credit Financial Business Act revised in March that limits the stake held by a financial firm in its affiliate to 150 percent of its equity capital. 

As of the second quarter of 2016, Mirae Asset Capital owns stake in its three affiliates worth 1.18 trillion won, about 197 percent of its 600 billion won equity capital. After the capital increase, the ratio will decline to 139 percent.

The investment unit will become the second largest stakeholder of Mirae Asset Capital with 28.98 percent stake after the financial group’s Chairman Park Hyeon-joo. The capital increase will dilute his current 48.7 percent stake down to 34.6 percent. Park, however, owns 60.2 percent stake in the investment firm.

Mirae Asset Capital has been the de facto holding company of the financial group, owning 38 percent stake in Mirae Asset Daewoo Securities and 20 percent stake in Mirae Asset Life Insurance.

With this 250 billion won investment, Park can improve the financial structure of Mirae Asset Capital that has weakened from funding acquisition of Daewoo Securities, and comply with the revised act.

He can also maintain his grip over the group without turning the de facto holding company into a legal holding company, which will bring closer inspection from the authorities, industry sources said. When the total amount of a company’s stake in affiliates exceeds 50 percent of its total assets, it should turn to a holding company, according to the Financial Holding Company Act.

By Hwang You-mee (glamazon@heraldcorp.com)