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When I interviewed Raghav Kapoor the other day, he mentioned a small Korean financial information provider called FnGuide (064850 KS — US$64 million).
I wanted to dig deeper. FnGuide is a tiny company in terms of market cap, but significant in terms of its impact on Korea's financial services industry. You see FnGuide's name mentioned almost every day in the business media and in sell-side research as a source of financial and economic data.
FnGuide owns the Excel-based financial data tools DataGuide and Quantiwise. It also has several equity research aggregation platforms such as FnGuide.com, WiseReport and Retamin.
Now, it's true that international alternatives such as Bloomberg and FactSet also provide corporate and economic data to investors. However, these platforms are expensive and not tailored to Korean-language disclosures and K-IFRS. In practice, most institutional investors seem to use Bloomberg for international stock data and FnGuide for local data.
In addition to financial data, FnGuide also has a fast-growing index business. That industry is dominated by Korea Exchange (KRX), which controls the benchmark index KOSPI. FnGuide's index business is smaller, but it dominates the market for thematic ETFs, which have become popular in recent years. In fact, the total value of ETFs tracking FnGuide's indices has doubled in less than a year. And Korea's ETF penetration remains far below that of the United States, suggesting continued upside in the coming years.
The stock has gone nowhere in the past four years. If you look at the share price, you'll also notice a recent spike:
This spike is due to a fight for control over the company. FnGuide was initially spun out of Samsung Securities in 2000 by Kim Gun-ho. But after a few years, FnGuide encountered financial difficulties and was bailed out by industrial conglomerate Hwacheon Machine Tool. In 2023, Hwacheon ousted Kim, seemingly frustrated with FnGuide's slow growth and low return on equity. Investors speculated that both sides would eventually accumulate shares to gain control of the company.
In the end, Hwacheon emerged as the winner, now controlling 47% of FnGuide. While having a machine tool company as a controlling shareholder of a financial information provider might seem odd, I think Hwacheon has minority interests at heart.
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