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SK Square's headquarters in Seoul (SK Square) |
SK Square, the investment arm of SK Group, is preparing for a leadership change as part of a drastic operational restructuring across SK companies, according to industry sources on Wednesday.
The company plans to hold a board meeting in the coming weeks to appoint a new CEO following its current chief Park Sung-ha’s pending departure. Han Myung-jin, former chief strategy officer of SK Telecom, is cited as one of the CEO candidates, sources said.
Park, who took office in March last year, has offered his resignation to take responsibility for the company’s lackluster business performance.
SK Square has invested in the semiconductor and information communication and technology sectors in recent years. Its key subsidiaries include maker of memory chips SK hynix, streaming service Wavve, online retailer 11th Street, mobile app store operator One Store and Tmap Mobility.
Despite its expansion in size, 18 out of 23 equity-holding companies reported operational losses last year.
In the first quarter, SK Square successfully turned to profit after six consecutive quarters of losses. This achievement was largely influenced by a recovery in the chips market, driven by SK hynix, which holds a 20.1 percent stake. The chipmaker recorded an operating profit of 2.8 trillion won ($2 billion) in the January-March period, and its equity method income of 387.4 billion won was reflected in SK Square’s performance.
In response, SK’s top management reportedly told SK Square to organize with the determination to “divest every (non-core) affiliate except SK hynix.”
SK Square has reviewed structural adjustments for most of its investment stakes since last year. However, the new restructuring efforts have faced challenges and an unsettled atmosphere persists.
“The title of investment arm has become meaningless due to worsening profitability,” said an industry source who wished to remain unnamed. “As intense portfolio changes are inevitable along with leadership changes, subsidiaries will be nervous about the possibility of being sold and adjusted."
Once a new CEO is appointed, the investment firm’s subsidiary portfolio is expected to undergo restructuring. During the regular shareholders’ meeting in March, the CEO expressed his intention to focus on building a chip-centric portfolio.
The strategy involves securing 2 trillion won in investment funds by next year and investing in various equipment and material companies within the semiconductor value chain.
SK Group is also accelerating efforts to improve the efficiency of its business portfolio, which has been inflated by reckless investments in recent years. Alongside a review of the business portfolio, the group will focus on “rebalancing” its subsidiary companies during the management strategy meeting scheduled for Friday.
According to data released by the Fair Trade Commission last month, SK Group’s subsidiaries totaled 219, surpassing 200 for the first time this year.
