S. Korean conglomerate affiliates up by 7 in 3 months amid green energy boom

Korea Fair Trade Commission

The number of affiliates of South Korea’s major conglomerates holding corporate assets of 5 trillion won ($3.79 billion) or more has grown by seven over the past three months from May. This period also saw a reduction in the count of large business groups from 82 to 81 due to the exclusion of Daewoo Shipbuilding & Marine Engineering Co. (DSME) from the list following its acquisition by Hanwha Group.

The Fair Trade Commission’s (FTC) recent analysis highlighted an increase in conglomerates’ affiliates from 3,076 in May to 3,083 in July. During this period, 66 companies were integrated into 25 business groups as affiliates. This integration included 32 new entities, seven spin-offs, and ten equity acquisitions. Conversely, 59 companies affiliated with 22 groups were excluded from the count, involving processes like liquidation for 16 entities and mergers and acquisitions for 12 entities.

Eugene Group led this trend by incorporating 13 new companies, closely followed by Hanwha Group with 9 and POSCO Group with 6. SK Group topped the list with the highest number of affiliates at 201, followed by Kakao Corp with 144 and Hanwha with 103 affiliates.

The FTC’s analysis indicates a widespread industry focus on expanding business through corporate establishment and equity acquisition in the power and energy generation sector. This trend is evident as various business groups, including LG Group, Nongshim, Hanwha, GS Group, LS Group, and Jungheung Construction, have ventured into biomass and hydrogen fuel power generators, offshore wind power companies, and electric bus charging businesses.

On the other hand, some companies like OCI Co. and Dongkuk Steel Mill Co. have restructured by creating new entities or divisions to adopt a holding company structure. Notably, four affiliates of SM Entertainment Co. and 20 affiliates of Sampyo Group were excluded from their respective business groups due to their recognition as independently managed entities by the owner family’s relatives.

The DSME had been designated as a business group with more than 10 trillion in total assets and classified as having three local affiliates as of May 1. However, on May 24, Hanwha Group acquired a stake in the DSME and consolidated the shipbuilder and its two subsidiaries. The acquisition resulted in the loss of affiliated companies and the subsequent exclusion of the DSME from the count of large business groups.