Korea is expected to witness a booming stock market this year with many companies preparing to list on the main bourse KOSPI and the secondary tech-heavy KOSDAQ.
Generally, companies decide to go public on the strength of confidence gained from successful business performance, improvement in corporate governance, and positive financing, although listing does not necessarily guarantee future success. Last year, close to 40 percent of the newly listed companies ended with their share price much lower than the offer price.
However, undeterred by this, more companies are planning to go public this year expecting their market capitalization to increase multifold. This will benefit the conglomerate families who will see a big jump in their stock wealth.
The Korea Herald Superrich Team investigated the stock wealth of seven chaebol families that applied for preliminary evaluations for an initial public offering last year or have a high chance of going public this year. Basing on the estimated market value of these companies, the stock wealth of respective owning families were calculated. As a result, if the companies reach the estimated value, the listed stock wealth of 26 major shareholders is likely to increase by a total of 4.4 trillion won ($3.6 billion).
Lotte Group
Hotel Lotte, the de facto holding company of Lotte Group, applied for a stock listing preliminary evaluation to the Korea Exchange on Dec. 21 and is expected to go public this year. Analysts predict its market capitalization will be around 10 trillion won to 15 trillion won. If the IPO is successful, the Lotte brothers -- SDJ Corp. chairman Shin Dong-joo and Lotte Group chairman Shin Dong-bin -- will see an estimated increase in stock wealth of around 277 billion won to 415.5 billion won.
Dong-joo holds a 1.62 percent stake in Lotte Holdings, the largest shareholder of Hotel Lotte. Considering the estimated market value of the hotel, his shares will increase around 148.5 billion won to 222.8 billion won.
Meanwhile, his younger brother Dong-bin holds a 1.4 percent stake in Lotte Holdings, which will be worth around 128.4 billion won to 192.6 billion won.
Adding to this, the brothers hold a combined stake of 72.65 percent in 11 Japanese investment companies, which are 100 percent owned by Lotte Holdings -- which in turn holds a 19.07 percent stake in Hotel Lotte. This circular shareholding means the brothers hold a 91.72 percent stake in Hotel Lotte.
System integration company Lotte Data Communication is also expected to go public, although it has not yet applied for a preliminary evaluation. If the company -- with an estimated market value of 1 trillion won -- goes public, the stock wealth of the Lotte brothers will additionally increase by 144 billion won.
The two currently hold a combined stake of 10.81 percent in the company. Furthermore, the brothers are the two largest individual shareholders of Lotte Shopping, which holds 38.68 percent of Lotteria, which in turn is the largest shareholder of Lotte Data Communication with 34.53 percent.
There are four other Lotte family members other than the brothers who directly and indirectly hold shares of Lotte Data Communication that may total 37.6 billion won in stock wealth. Therefore, the increased stock value of the two unlisted Lotte companies owned by family members will reach a maximum of 597.1 billion won.
Taekwang Group
Broadcasting unit t-broad of Taekwang Group received approval to go public at the end of December last year. The group’s former chairman Lee Ho-jin, who currently holds a 10.78 percent stake, is also the largest individual shareholder of Taekwang Industry, with 15.14 percent -- which in turn holds 53.94 percent of t-broad. Nine Taekwang Group family members hold a total of 11.17 percent of the company’s shares including Lee’s nephew and second largest individual shareholder Lee Won-joon with 7.49 percent as well as Lee’s son Lee Hyun-joon holding 7.08 percent.
Market analysts expect t-broad’s market cap to reach 1 trillion won following its listing. Therefore, 10 Taekwang Group family members who hold shares directly or indirectly will see their listed stock wealth increase by 320.6 billion won, of which 59.1 percent or 189.5 billion won is of former chairman Lee. His current listed stock wealth is worth 199.2 billion won.
Daelim Group
Passing preliminary evaluation to list on the stock market, domestic construction material company Daelim C&S plans to go public within the first half of the year. It took the decision to go public due to the improvement in sales performance of its affiliate Daelim Industrial --which recorded a revenue of 210.4 billion won in the first three quarters of 2015, 39.8 billion won more than the previous year.
As a result, the stock wealth of Daelim Group honorary chairman Lee Joon-yong and vice chairman Lee Hae-wook is expected to jump 43.7 billion won.
Joon-yong has a stake of 2.28 percent in Daelim C&S as of May. Based on an estimated market value of the subsidiary of around 300 billion won, his stock will be worth 6.8 billion won. He is also the largest individual shareholder of listed company Daelim Corporation that has a 19.6 percent stake in Daelim Industrial -- Daelim C&S largest shareholder.
Meanwhile, Hae-wook also indirectly holds Daelim C&S stocks worth 15.4 billion won through a 37.7 percent stake in Daelim Corporation.
Samsung Group
Samsung Group bio subsidiary Samsung Biologics has a very high chance of being listed on the stock market. If it does, its market value is expected to exceed 10 trillion won, which is around seven times the company’s current book value of 1.4 trillion won.
If Samsung Biologics does go through with its plans of listing, the indirectly held shares of five Samsung family members including Samsung Electronics vice chairman Lee Jae-yong will increase by an aggregate 1.8 trillion won.
According to the Financial Supervisor Service, Lee Jae-yong has a 16.4 percent stake in Samsung C&T and a 0.57 percent stake in Samsung Electronics -- which hold 51 percent and 46.8 percent shares, respectively, in Samsung Biologics. Therefore, if the company’s estimated market value is taken into consideration, his stock wealth will increase by 863.1 billion won.
Similarly, Samsung Electronics chairman Lee Kun-hee’s stock wealth will increase by 323.4 billion won, and Hotel Shilla president and CEO Lee Boo-jin’s and Samsung C&T’s fashion group president Lee Seo-hyun’s stock wealth will each increase by 278.9 billion won. Wife of Samsung Electronics chairman and director of Leeum, Samsung Museum of Art, Hong Ra-hee’s stock wealth is also expected to increase by 35.7 billion won.
Pan-Hyundai groups
Analysts speculate that Hyundai Engineering will be listed on the stock market, as it was reformed into a general construction company after merging with Hyundai Amco last year.
If the company gets listed, its estimated market value will be 5 trillion won.
Meanwhile, the company’s largest shareholder is Hyundai Engineering & Construction with a 38.6 percent stake, followed by Hyundai Motors vice chairman Chung Eui-sun with an 11.7 percent stake. Hyundai Motor chairman Chung Mong-koo also holds 9.35 percent shares of Hyundai Engineering.
If Hyundai Engineering reaches the 5 trillion won estimate, chairman Chung’s stock wealth will increase by 562.1 billion won, and vice chairman’s wealth is estimated to increase by 746 billion won, which means a total of 1.3 trillion for both of them combined.
Hyundai Oil Bank may also list on the stock market within this year. Having an estimated market value of 4 trillion won, this will in turn increase the market value of Hyundai Heavy Industries by 3.6 trillion won because it holds 91.13 percent of Hyundai Oil Bank’s shares.
Meanwhile, Hyundai Heavy Industries’ largest shareholder Asan Foundation chairman Chung Mong-joon with a 10.15 percent stake will see a stock wealth increase of 369.9 billion won.
The increased stock wealth of the three Hyundai Chungs will amount to a total of 1.7 trillion won.
By The Korea Herald Superrich Team (
seoyounglee@heraldcorp.com)
----------------------------------------------------------------
Hong Seung-wan
Cheon Ye-seon
Bae Ji-sook
Yoon Hyun-jong
Min Sang-seek
Lee Seo-young
