Owners, affiliates hold controlling stakes in top 45 Korean conglomerates

[THE INVESTOR] Stakes held by owners, their relatives, affiliates and in the form of treasury stocks at 45 of South Korea’s largest industrial groups inched up to 57.3 percent as of April, according to the Fair Trade Commission on July 7.

The 45 are a part of the top 65 industrial groups whose corporate governance is being closely monitored by the government watchdog.

These so-called “internal stakes” at the 65 groups altogether reached 29.9 percent, up 0.5 percentage point on-year. 

The FTC attributed the latest increase to a rise in affiliate cross-holdings.

“The stakes held by the owners and their relatives actually fell, by 0.2 percentage point. But affiliate holdings were higher, and that tipped the scale,” said Park Sul-min, an official at the FTC’s industrial group policy department who helped draft the report.

Separate from stakes held by owners and their families, affiliates share-holdings rose 2.1 percentage points to 50.6 percent at the 45 firms.

“This means that the owner families are choosing to tighten their grip not through direct stakes, but through affiliate share-holdings,” Park said.

In particular, Lotte showed the biggest rise in affiliate holdings this year, with an increase of 21.3 percentage points. It was followed by Hyundai Department Store whose affiliate stakes rose 11.8 percentage points.

Lotte, Hyundai Department Store, SK and E-Land also saw an increase in the owner family’s stakes, while the figure for Kumho Asiana, KCC, Seah and Mirae Asset was lower.

Kumho Asiana, SK, Harim and Samsung Heavy Industries were among those where the owners and their family held the smallest stakes.

At Hankook Tire, KCC, Dongbu and Booyoung, on the contrary, they held the highest stakes.

Meanwhile, eight industrial groups including Samsung, Hyundai Motor and Lotte were found to be engaging in circular investment schemes. Lotte had the biggest number of circular links amounting to 67, which was down 349 from 2015.

By Kim Ji-hyun (jemmie@heraldcorp.com)