Kakao Pay, the online payment service of the South Korean messenger and Internet giant Kakao, announced the acquisition of a stake in Siebert Financial, a brokerage firm based in New York.
The value of this transaction was $17 million. Currently, the South Korean company owns 19.9% of the shares of an American brokerage firm.
This transaction is the first stage of the implementation of the online payment service plan to enter the Siebert ownership structure. The company intends to acquire another 31.1% stake in the New York-based firm. The future of the next transaction depends on the shareholders’ decision and regulatory approval. If the Kakao Pay plan is implemented, then its share in the ownership structure of the brokerage company will reach 51% of the shares.
Gloria Gebbia, the controlling shareholder of Siebert and a member of the management board, said that the final decision on the second transaction is most likely to be made in early 2024.
Kakao Pay launched its mobile payment service in 2014. The firm was spun off from Kakao Corp in 2017 and is currently one of the largest mobile payments players in South Korea.
The fintech company offers financial services for making payments offline and online. Also in the list of the firm’s services, there is an assessment of the degree of creditworthiness, insurance, money transfers, and lending. Currently, the company’s customers are 40 million South Koreans.
The American brokerage and financial consulting firm Siebert Financial and its subsidiaries have been providing financial services for more than 50 years. One of the subsidiaries’ structures, Muriel Siebert & Co (MSCO), has a client base consisting of 100,000 customers.
The acquisition of a portion of the brokerage firm’s shares is Kakao Pay’s first merger and acquisition transaction outside the domestic market. These actions are being carried out as part of the implementation of a large-scale strategy to enter the American market and strengthen the brokerage division of Kakao Securities.
Kakao Pay intends to create a new solution for trading stocks abroad, which will combine the user-oriented MTS (money transfer services) of Kakao Securities with Siebert’s infrastructure, which can be extended to foreign fintech companies, including in Southeast Asia.
Kakao Pay integrates its technological expertise into the financial services of an American firm as part of a partnership to offer an advanced user experience by expanding access to the US securities market, reducing fees for trading them, and much more.
The chief executive officer of the South Korean company, Won Geun Shin, says that now the firm has the opportunity to expand its financial business abroad through strategic investments. Kakao Pay offers services in South Korea, Japan, Macau, Singapore, France, and China.
Siebert’s management team will remain at the helm. Gebbia said that the deal most likely will not affect the day-to-day work, and the team of 120 employees in terms of the specifics of their professional activities will not face radical changes. She also noted that the partnership with Kakao Pay will provide the company with financial resources for opportunistic investments in key business areas.
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