As a political theme stock in the early presidential election phase, companies whose stock prices surged rapidly have recently pursued paid-in capital increases, all led by SK Securities, drawing attention. SK Securities, which actively manages paid-in capital increases for small and medium-sized listed companies, is now looking to expect popularity in subscriptions through political theme stocks.
However, there is a possibility that SK Securities may incur losses as it assumes unsold shares during the process of managing the paid-in capital increase. Due to the nature of political theme stocks, it is mostly the case that stock prices, which had soared, return to their original position after the presidential election. There are evaluations suggesting that SK Securities has bet on 'high risk-high reward'.
According to the financial investment industry on the 28th, SK Securities has taken charge of the paid-in capital increases for Sangji Construction, Hyungji I&C, and Hyungji Global. All of these stocks are considered political theme stocks for Lee Jae-myung, the presidential candidate of the Democratic Party of Korea, and have recently seen a surge in stock prices, leading to attempts to raise funds through paid-in capital increases while the stock prices are temporarily skyrocketing. Securities firms earn commission profits by managing paid-in capital increases for listed companies.
Among these listed companies, SK Securities can expect the largest commission from Hyungji Global. Hyungji Global is conducting a paid-in capital increase of 20.5 billion won (6 million shares) through a general public offering of unsold shares. The expected issuance price is 3,420 won per share. SK Securities will receive 2% of the total amount raised as management commission and will take on unsold shares to receive an additional 15% commission on the remaining purchase amount if unsold shares occur. Considering that the largest shareholder, Fashion Group Hyungji, plans to subscribe to only 30% of the paid-in capital increase volume, it can obtain a commission profit of up to 2.565 billion won.
The first issuance price is expected to be determined on the 30th, and given the recent stock prices, the current issuance price is likely to rise by about double. At that time, the management commission will also increase accordingly.
However, the possibility of large-scale unsold shares presents a risk factor. The subscription for existing shareholders of Hyungji Global will be conducted on June 16-17, after the June 3 presidential election, and the general public offering subscription will take place a few days later on June 19-20. Once the presidential election is over and the thematic material disappears, the likelihood of subscription popularity becomes uncertain.
Hyungji Elite, a subsidiary of Hyungji Global, announced on the 25th that it plans to sell off most of the new share subscription rights it was allocated, without participating practically in this paid-in capital increase. This means that it will not participate in this paid-in capital increase. Fashion Group Hyungji also disclosed a plan to sell its subscription rights.
If unsold shares flood in, SK Securities may have to take on up to 14.4 billion won (based on expected issuance price) in unsold shares. Moreover, if the stock price of Hyungji Global returns to its original position after the new share listing date of July 4, the commission profit could exceed 2.5 billion won, and yet SK Securities may suffer losses. Last month, Hyungji Global's stock price hovered around 2,600 to 2,800 won.
However, in the cases of Sangji Construction and Hyungji I&C, SK Securities only took on the role of arranging the offering. It seems that they did not assume the underwriting responsibility due to the large risk of unsold shares. Instead, the commission revenue is not significant.
Sangji Construction, which is conducting subscriptions for existing shareholders over two days starting from the 28th, has seen its paid-in capital increase scale surge from the initial 20 billion won to 91.4 billion won due to its recent stock price explosion. The issuance price jumped from 5,000 won to 22,850 won per share. However, SK Securities decided to charge a flat management fee of only 1.5 billion won.
Hyungji I&C has agreed to give 1.2% of the total amount raised as a commission to SK Securities. The first issuance price for Hyungji I&C's paid-in capital increase is set at 1,379 won per share, aiming to raise a total of 39.3 billion won through the increase of 2.85 million shares. SK Securities can collect up to 470 million won, but if there is a large amount of unsold shares during the subscription, the commission revenue will decrease accordingly.
Since the managing securities firm receives a commission based on the amount raised, it needs to participate in the paid-in capital increases conducted when stock prices rise to increase revenue. However, cases like theme stocks that see a sharp increase in a short period and ultimately decline in stock prices may also entail losses.
A securities industry official noted, "If the paid-in capital increase structure is crafted when stock prices are at their peak, the commission revenue relative to the risk of unsold shares is relatively large, but if the political theme premium disappears, the firm has to absorb the underwriting of unsold shares, potentially leading to losses in the tens of billions of won."