Next Securities has completed the conversion into equity of 15 billion won ($10.6 million) in convertible bonds it had issued to Timfolio Asset Management and Baytree Private Equity Fund.
The two firms, which had been bondholders, converted to equity investors at a notably early stage, relieving Next Securities of its repayment burden while bolstering its equity capital. The conversion gives the two firms a combined stake approaching 10%, establishing them as core investment partners.
According to the financial investment industry, the total number of shares converted was 661,754. Timfolio Asset Management submitted a conversion request for 10.5 billion won and Baytree Private Equity Fund for 4.5 billion won, both at a conversion price of 22,667 won per share. The two firms' combined shareholding after conversion stands at approximately 9.9%, a substantial stake that goes well beyond simple financial investment and is on par with that of a major shareholder.
The two firms had subscribed to the convertible bonds Next Securities issued in July, with a maturity date of July 2030 — four years from issuance. Convertible bonds are typically held in bond form for a considerable period after issuance, with conversion to equity usually taking place closer to maturity after weighing factors such as share price appreciation or the timing of investment recovery.
What makes this case unusual is that the conversion took place within barely a month of the bonds being issued, with four years still remaining until maturity. The swift move to equity is widely interpreted as a sign of strong conviction in Next Securities' growth potential.
Particularly notable is that the investors chose to give up the safety net of guaranteed interest payments and principal repayment that comes with holding the bonds, and instead moved directly to become shareholders with a 9.9% stake.
Industry observers say the two firms have cast themselves as long-term investors willing to share in the risk of Next Securities' medium- to long-term growth story, rather than seeking short-term gains or the security of bond repayment. Given that the conversion came so early in the issuance cycle, analysts also expect the two firms to carry greater weight in Next Securities' policy decisions and business direction going forward.
Next Securities has raised a total of 30 billion won in investment this year alone. In May it issued approximately 15 billion won in convertible bonds to KCGI, then in July raised an additional 10.5 billion won from Timfolio Asset Management and 4.5 billion won from Baytree Private Equity Fund.
Baytree Private Equity Fund is a private equity manager founded by Jo Ung-gi, former vice chairman of Mirae Asset Securities. The investment is seen as significant not only for the equity capital it provides but also for the endorsement it represents from a veteran of the financial investment industry.
The funds raised are earmarked for the development of a retail trading platform to be rolled out in phases before year-end, along with infrastructure buildout and talent acquisition. Next Securities is preparing a retail brokerage service that combines AI technology and financial content on top of its existing derivatives brokerage and corporate finance business, aiming to offer retail investors a differentiated investment experience.
With the bond-to-equity conversion complete and capital strengthened, analysts say the path is clear for the retail service the company is targeting for launch this year. The removal of the bond repayment burden also gives the company greater flexibility to deploy funds toward new service development and infrastructure investment.
With the two firms now positioned as long-term shareholders holding a 9.9% stake rather than creditors, Next Securities has secured not only a more stable financial structure but also a supportive base for its new business ventures.
A Next Securities official confirmed that the two firms had recently completed the convertible bond conversion. "We see this conversion as a reflection of the investors' confidence in Next Securities' medium- to long-term growth potential and the direction of our new retail business," the official said, adding that the company would "use the strengthened capital base to enhance the platform's stability and technological competitiveness, and bring new investment services suited to the AI era to market without delay."
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