Korean fintech Kakao Pay buys a majority stake in the American brokerage firm Siebert

Image credit: Kakao Pay

Kakao Pay, the online payment service of South Korean messaging and internet giant Kakao, announced that it has acquired a stake in Siebert Financial, a brokerage firm based in New York. Kakao spent $17 million on this transaction, and the company now owns a 19.9% ​​stake in Siebert.

This is just the first step as Kakao Pay plans to acquire an additional 31.1% stake in Siebert subject to shareholder and regulatory approval. If it goes through, Kakao Pay will become the largest shareholder in Siebert, holding a 51% stake in total. Gloria Gebbia, Siebert’s controlling shareholder and board member, told TechCrunch that the second transaction is expected to close in the first quarter of 2024.

Kakao Pay first launched its mobile payment service in 2014. It was spun off from Kakao Corp in 2017 and is now one of the major mobile payment players in South Korea. The Korean fintech firm provides online and offline payments, money transfer, credit rating, insurance and loan services to approximately 40 million registered users in South Korea. Siebert Financial, the US-based brokerage and financial advisory firm, and its subsidiaries have been providing financial services for over 50 years. One of the subsidiaries, Muriel Siebert & Co (MSCO), has more than 100,000 customers.

Today’s acquisition represents Kakao Pay’s first M&A transaction outside the domestic market. It is part of a larger strategy as the company plans to expand into the US market while strengthening its brokerage unit Kakao Securities.

Kakao Pay “plans to create a new overseas stock trading solution that combines the user-centric MTS (money transfer services) of Kakao Securities with Siebert’s brokerage infrastructure, which can be extended to foreign fintech companies, including those in Southeast Asia,” Gebbia said. TechCrunch.

Kakao Pay will integrate its technology expertise into Siebert’s financial services as part of the strategic partnership to offer “an advanced user experience through expanded market access to US securities, lower securities trading fees and more,” Gebbia said.

“Kakao Pay has achieved a great opportunity to expand its financial business overseas by making a strategic investment in Siebert, a company with over 55 years of tradition and experience,” Kakao Pay CEO Won-Keun Shin said in a statement.

Kakao Pay currently offers payment services in South Korea, Japan, Macao, Singapore, France and China.

Siebert’s current management team, led by the Gebbia family, will remain at the helm of the company. The team of 120 employees will remain after the transaction closes, the two firms told TechCrunch. “We do not expect this transaction to affect day-to-day jobs and will continue to operate the business in a manner that drives long-term success for our customers and employees,” Gebbia said.

Kakao Pay has a team of 1,130 people, according to a Kakao Pay spokesperson.

“The partnership with Kakao Pay will provide us with significant financial resources to opportunistically invest in our core business lines, while leveraging the expertise and technological capabilities” of Kakao Pay “to expand our reach and improve our technology offerings,” Gebbia said in a statement.