Korea Zinc’s shareholding race becomes competition between founding families

Choi Yoon-beom, chairman of Korea Zinc. [Courtesy of Korea Zinc]

Choi Yoon-beom, chairman of Korea Zinc, and his associates have been accelerating their purchase of the company’s shares this month to bolster their position in a shareholding race against Chairman Jang Hyung-jin of Youngpoong, Korea Zinc’s parent company.

Data from the Financial Supervisory Service found that Choi and his associates purchased 15,286 shares, or 0.08 percent, of Korea Zinc this month, with 15 more of Choi’s family members acquiring shares. As a result, Choi and his associates now hold 16.03 percent of the company’s shares, of which preferred shareholder Hanwha Group holds 8.08 percent.

Meanwhile, the Youngpoong side holds a 33.22 percent stake, including 5.12 percent from Jang and his associates, with Jang purchasing approximately 200,000 shares of Korea Zinc at 100 billion won ($75.3 million) from March 2023 to recently. Even Jang Se-wook, Chairman Jang’s nephew and vice chairman of Signetics, invested his funds in Korea Zinc shares, indicating that this has become a fierce competition between the two families.

Hyundai Motor Group announced on August 30 that HMG Global LLC, a U.S.-based entity jointly invested in by Hyundai Motor Co., Kia Corp., and Hyundai Mobis Co. will acquire a 5 percent stake in Korea Zinc through a third-party capital increase, valued at 527.2 billion won.

While the two groups battle for shares, Jang’s side currently holds a 4.6 percentage point lead over Choi’s side. But when Hyundai Motor Group’s new shares become public on October 6, Choi‘s shareholding will slightly surpass Jang’s.

Choi’s recent stake purchases amid the investment from HMG reflect his strong commitment to Korea Zinc’s separate management.

Since its co-founding by the late Jang Byung-hee and late Choi Ki-ho, Youngpoong has adopted a divided management system, with the Choi family overseeing zinc unit Korea Zinc, and the Jang family managing the electronics unit. Since taking office in 2022, the incumbent Korea Zinc chairman has been leveraging his family connections to secure friendly shareholders, including Hanwha Group and LG Chem, to achieve his goal.

The Jang family countered Choi’s efforts by purchasing over 200,000 shares of Korea Zinc since March to advance in the race, but Hyundai’s decision to participate in a 500 billion won capital increase dealt a significant blow to the family’s efforts. The market consensus suggests that Hyundai could align with Choi’s side.

But some market sources note that Choi’s strategy of securing allies through third-party capital increases and share exchanges could become a long-term burden for the company as the Hyundai Motor Group and Hanwha alliances increases the pressure on Korea Zinc to distribute dividends.

The company’s annual dividend, which was around 11,000 won per share in 2019, is expected to rise to 15,000 won in 2021 and 20,000 won in 2022. The company is further strengthening its shareholder-friendly policies this year by paying an interim dividend for the first time in 17 years.