Multibillion-dollar project to develop Korea's southernmost port city Yeosu may flop

A multibillion-dollar project by Mirae Asset Financial Group to develop South Korea’s southernmost port city of Yeosu is on the brink of a collapse on environmental challenge and regulatory oversight on the funding.

According to sources from the investment banking industry on Thursday, Mirae Asset Financial Group Chairman Park Hyeon-joo has commanded executives to reexamine the Yeosu development project with the possibility of killing the plan altogether after the project has invited complaint from the Yeosu city council and FTC probe.

The financial group announced the 1.5 trillion won ($1.3 billion) infrastructure plan at the end of 2016 for completion in 2022. The project however has been stalemated on allegations for property speculation and illegal funding.

Jeonnam Development Corporation picked Mirae Asset Financial Group as the final winner to carry out the Yeosu development project in 2016. As part of a project to develop a coastal tourism complex in Gyeongdo in Yeosu, the group planned to build an apartment hotel, but it took five years to receive a conditional approval from the city amid opposition from local people complaining about possibility of real estate speculation environmental harms.

The country’s antitrust watchdog probed the group’s affiliates including Mirae Asset Consulting and Mirae Asset Securities over illegal financing allegations. The FTC has been reportedly examining the governance structure of GRD, a special purpose company established by Mirae Asset Consulting’s subsidiary YKD. Mirae Asset holds a 20.5 percent stake in GRD via YKD, and the remaining stake is owned by other partners including Hyundai Engineering & Construction, Hoban Construction and BSG.

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