Mid-sized Construction Companies Expanding Size and Entering New Businesses

Strengthening Responsible Management at Bando Group
CEO Kim Ho-gyun Leads Investment Operations

Daelim Construction, Formed by Merger of Samho and Goryeo Development
Aiming to Enter Top 10 Construction Companies by Expanding Size

[Asia Economy Reporters Donghyun Choi and Onyu Lim] Mid-sized construction companies are launching large-scale structural reforms one after another. Due to the economic downturn and strengthened government regulations, opportunities in the housing market are gradually shrinking, and even these are being dominated by large construction companies with stronger financial power. This is interpreted as an intention to seek new revenue sources in different sectors.

According to the industry on the 1st, Bando Group, which celebrates its 50th anniversary this year, announced the day before that it would reorganize its existing structure into construction and investment management divisions to strengthen a responsible management system. The group's main affiliates, Bando Construction and Bando General Construction, will be in charge of the construction division, while the investment management division was established within the holding company Bando Holdings.

In particular, the background of CEO Kim Ho-gyun, who will lead the investment management division, stands out. CEO Kim is a finance and legal expert with extensive experience in corporate risk management and investment operations, having worked at Hana Bank and served as Chief Financial Officer (CFO) of Kumho Group's Strategic Management Headquarters. While with Kumho Group, he also held positions such as Executive Director at Kumho Industrial, an internal director at Kumho Building, a real estate management company, and a financial executive at Asiana Airlines. Industry insiders interpret Bando Construction's recruitment of CEO Kim, who is skilled in financial management not only in real estate but also in the aviation sector, as a strategic move possibly considering the acquisition of management rights of Hanjin KAL. A Bando Group official explained, "We will expand our business areas beyond housing projects to include private land development, urban maintenance, overseas development projects, rental housing business, and leisure business. In particular, through the investment management division, we will challenge new businesses such as mergers and acquisitions (M&A)."

Samho and Goryeo Development, affiliates of Daelim Industrial, officially launched Daelim Construction through a merger on the same day. Daelim Construction plans to target niche markets in the construction industry where Daelim Industrial's influence is limited, such as metropolitan area maintenance projects, data centers, large social overhead capital (SOC), and global developer businesses, based on Samho's housing and Goryeo Development's civil engineering capabilities. The industry expects Daelim Construction to enter around 16th place in this year's construction capacity evaluation. A Daelim Construction official said, "We will strengthen the competitiveness of the existing companies and maximize management synergy through the merger to enter the top 10 construction companies by 2025."

Daelim Industrial recently faced challenging situations both domestically and internationally. Overseas, orders are difficult due to the impact of COVID-19 and low oil prices. Domestically, high-intensity regulations such as the private land price ceiling system and the excess profit recovery system for reconstruction projects are expected to reduce maintenance project volumes. It is a time when new growth engines at the group level are needed.

Meanwhile, Hanyang, known for its housing brand 'Sujain,' completed the largest solar power plant in Korea on the 29th of last month in the Solar City 'Solar City' area of Guseong District, Haenam County, Jeollanam-do, declaring its business expansion into the renewable energy sector. The plant covers approximately 1.58 million square meters and is equipped with Korea's largest 98 MW solar power generation facility and the world's largest 306 MWh energy storage system (ESS). Hanyang is also constructing Korea's first private commercial liquefied natural gas (LNG) storage facility in Yeosu, Jeollanam-do, aiming to operate it in three years. The company plans to challenge various renewable energy sectors such as floating solar power and onshore wind power in the future.