SEOUL, Oct. 30 (Korea Bizwire) – The number of holding companies in Korea has exceeded 130 for the first time since 1999 when the holding company scheme was introduced. Even though large corporations with assets in excess of 5 trillion won were restricted by law to take advantage of the holding company structure as it constitutes cross-shareholding within the business group, they still own a large number of affiliates outside the orbit.
According to data released by the Fair Trade Commission on October 29, the total number of holding companies as of the end of September 2014 was 132, including 15 financial service companies. This is up 5 from 127 at the end of last year.
The number of holding companies has steadily increased from 20 in 2001 to 24 in 2004, 60 in 2008, 96 in 2010, and 115 in 2012. As for the number of holding companies under large business groups, it declined by one to 30 from last year as Korea Investment & Securities and Woongjin Group were excluded from the large corporation designation.
Of the 26 large business groups that have not moved to the holding company structure, 14 of them owned 100 or so financial affiliates while 13 have formed cross-shareholding relationships with 481 entities. The six large groups including Samsung, Hyundai Motor, Lotte, Hyundai Heavy Industries, Hyundai, and Hyundai Development had both financial affiliates and cross-shareholding relationships.
The average amount of assets held by the 132 holding companies was 1,888.8 billion won, almost similar to that of last year’s at 1,875.8 billion won. Their average debt-to-equity ratio was 35.4 percent, much lower than the 200-percent level proscribed by law not to exceed. The debt ratio has been on a declining trend for the past few years. Of the large business group-affiliated holding companies, Hite-Jinro Holdings (90.6%), Kolon (81.4%), Doosan (67.3%), SK (41.2%), and Booyoung (30.3%) were high in the debt-to-equity ratio.
By Sean Chung (email@example.com)