Posco mulls holding company structure: sources

 

South Korean steelmaker Posco Group is pushing to establish a holding company to make a breakthrough in business expansion and eventually to boost its market valuation, industry sources said Wednesday.

Posco, the country’s sixth-largest conglomerate in terms of assets, has been drawing a downward graph in stocks despite its record-high business result this year due to the booming steel industry during pandemic. 

According to sources, Posco Group will table the issue of an establishment of a holding company during its board of directors meeting slated for Dec. 10. 

If the agenda passes the board meeting, the steelmaker will put the plan to a vote during a shareholders meeting in January. 

Posco has been exploring future business in line with declining steel demand and global curbs in the move toward carbon neutrality. But its typecast image as a steelmaker has been a hurdle for the company in bringing its new businesses to the fore, according to market insiders. It appears to be seeking structural reorganization to secure new momentum, they added. 

To respond to the industry’s business transition toward green energy, Posco has been investing in the secondary battery material field, extending its business capability from procurement of raw materials to production of battery materials since last year. The group has also joined hands with GS Group to expand its battery recycling and fuel cell business in September.

According to the industry, a scenario of separating Posco Group into a business entity and a holding company is likely, and such reorganization will give the latter a role of overseeing development of future business, research and development and environmental, social and governance management. After the possible spinoff, the steelmaking affiliate will stay underneath the holding company. 

“In terms of investment in new business, (a holding company) can make quicker decisions as well as creating a better cash flow with restructuring of the affiliate’s business, which can possibly positively influence the group’s valuation in the market,” said Song Seon-jae, an analyst from Hana Financial Investment.

The group’s spokesperson said that nothing has been decided, although it has been “reviewing various methods to respond to the fast-changing nature of future business.” 

By Kim Da-sol (ddd@heraldcorp.com)