[BizHanKook] Kakao Pay Securities is venturing into the expansion of its investment banking (IB) business by pursuing its first SPAC (Special Purpose Acquisition Company) listing. This move marks the company’s first attempt at a SPAC listing since obtaining its investment brokerage license, with plans to use it as a foundation to strengthen its IB business. While Kakao Pay Securities has continued to show earnings growth since turning a profit, its revenue structure, heavily reliant on retail commissions, is considered a limitation. Furthermore, the gap between it and its competitor, Toss Securities, has widened. Attention is now focused on whether Kakao Pay Securities can use this SPAC listing to jumpstart its IB business and successfully diversify its revenue streams.
“Funding IB operations with internal resources”: Parent company Kakao Pay invests 26.4 billion won
On the 6th, Kakao Pay Securities filed for a preliminary review for the listing of ‘Kakao Pay Securities SPAC No. 1’ with the Korea Exchange. The largest shareholder of the SPAC, established by Kakao Pay Securities on October 16, is Company K Partners, a domestic venture capital (VC) firm. Ra Seok-hwan, an executive at Company K Partners, has been appointed as the CEO of the SPAC. Considering that a SPAC listing typically takes three to four months, it is expected to be listed on the KOSDAQ market in early 2027.
A SPAC must merge with a promising unlisted company within three years. Given that Company K Partners, which has partnered with Kakao Pay Securities, has built a diverse investment portfolio including companies like Upstage, Fadu, Netmarble Games, Ridi, and The Pinkfong Company, and has surpassed 1 trillion won in assets under management, it is considered well-positioned to identify promising targets.
Kakao Pay Securities stated, “This SPAC listing is our first project since obtaining the investment brokerage license, and it is an attempt to gain experience and a track record in overall public offering and listing operations. Through this, we aim to support companies with innovation and growth potential in entering the capital market.” They added, “We will diligently proceed with the remaining review and public offering procedures according to the law, and we plan to expand our IB business in stages, prioritizing investor protection and market trust.”
Kakao Pay Securities initiated its push to strengthen its IB business by obtaining a license for investment trading (securities) on July 1. By gaining the ability to go beyond securities brokerage to perform direct underwriting and trading, the company presented a blueprint to link its IB and retail businesses and leap forward into a comprehensive securities firm. It plans to secure new clients through IPO underwriting and public offering subscription services.
At a press conference held after obtaining the investment brokerage license, Shin Ho-cheol, CEO of Kakao Pay Securities, noted, “Over the next 6 to 12 months, we will concentrate our capabilities on IPO underwriting, public offering subscriptions, and venture capital investments,” and added, “We will raise funds to strengthen the IB sector using our own resources.”
Indeed, the parent company, Kakao Pay, participated in a paid-in capital increase for Kakao Pay Securities through an in-kind contribution to bolster capital. At the end of September, Kakao Pay contributed its stakes in the U.S. brokerage firm Siebert Financial and the domestic alternative trading system NexTrade as in-kind assets in exchange for shares of Kakao Pay Securities. Through this transaction, Kakao Pay Securities secured approximately 26.4 billion won in capital.
Kakao Pay Securities’ equity capital is approximately 204.6 billion won, classifying it as a small-scale securities firm. However, it is evaluated as highly profitable relative to its size, with a Return on Equity (ROE) of 22% as of 2025. Its performance is also on an upward trend. It successfully turned a profit with an operating profit of 42.7 billion won in 2025, and this year, buoyed by the stock investment craze, its cumulative operating profit for the third quarter (78.8 billion won) has already surpassed the previous year’s annual operating profit.
Commission revenue plummets as investment fervor cools… expanding presence by utilizing the Kakao ecosystem
However, despite the growth in performance, there are criticisms regarding the limitations of its revenue structure. The main revenue for Kakao Pay Securities still comes from retail commissions, with the contribution of the IB and asset management sectors remaining low. Performance volatility depending on stock market conditions is also appearing. As investment enthusiasm cooled in the second half of the year, third-quarter performance plummeted compared to the previous quarter. Kakao Pay Securities’ revenue and operating profit in the third quarter decreased by 39% and 60%, respectively, compared to the second quarter.
It appears the company is pursuing a SPAC listing to diversify this revenue structure and strengthen its IB competitiveness. Indeed, domestic small and medium-sized securities firms are consecutively pursuing SPAC listings because a track record of SPAC listings can serve as a stepping stone for future general IPO underwriting business. IM Securities listed ‘IM SPAC No. 1’ on November 4, and Woori Investment & Securities, which filed for a preliminary review for ‘Woori Investment SPAC No. 1’ in August, received approval on October 6.
Strengthening the IB sector is also one of CEO Shin Ho-cheol’s management strategies for his second term. CEO Shin, who took office in March 2024, succeeded in his reappointment this past March, extending his term by one year. Following his reappointment, Kakao Pay Securities established a strategy to increase transaction volume focusing on AI-based investment, community features, and advanced order and asset management functions. Along with this, the company announced plans to lower the barriers for retail investors to access IB products and strengthen the link between retail and IB sectors.
The significant gap with its competitor, Toss Securities, is another challenge. Since its launch in 2021, Toss Securities has grown rapidly, successfully turning its first annual net profit in 2023. Toss Securities significantly expanded its user base by launching an easy and intuitive mobile trading system (MTS). Having grown with overseas stock trading commissions as its main revenue source, Toss Securities recorded an operating profit of 319.5 billion won in the first half of this year alone.
Kakao Pay Securities is also actively working on expanding its reach. In particular, it is focusing on acquiring users by leveraging the Kakao ecosystem. Since September, it has partnered with Kakao Bank to provide stock-related services within the ‘Stock Home’ section of the bank’s app. Since Kakao Bank users who do not have a Kakao Pay Securities account can open a stock account within the banking app, the structure is designed to funnel Kakao Bank customers into Kakao Pay Securities. Kakao Pay Securities has set a goal to lower investment barriers and increase the number of domestic stock investors from the current 14 million to 20 million within three years.
The company is also running a campaign that provides up to 100,000 won worth of domestic stocks to couples who registered their marriage this year. According to Kakao Pay Securities, over 15,000 participants verified their marriage registration within five days of the campaign’s launch. They have also announced a campaign for 2027 where they will provide 100,000 won worth of stocks to newborns as a birthday gift.