16 New Holding Companies Established... 6 Large Corporations Including Doosan, LX Affiliated
48 Holding Companies Affiliated with Large Corporations... Decline in Small and Medium Holding Companies
Average Total Assets 2.3838 Trillion Won... Total Cash Assets 67 Trillion Won
[Asia Economy Sejong=Reporter Lee Jun-hyung] The number of holding companies affiliated with large business groups has increased by 50% over the past decade. The average assets of holding companies were recorded at 2.4 trillion KRW.
According to the status of holding companies announced by the Fair Trade Commission on the 28th, as of the end of last year, there were 168 holding companies, an increase of 4 from the previous year (164). Specifically, 16 holding companies were newly established, and 12 were excluded. Among the 16 newly established holding companies, six, including Doosan, LX Holdings, and DL, belong to large business groups.
The number of holding companies affiliated with large business groups increased by 2 to 48 compared to the previous year (46). Compared to 2017 (41), before the asset requirement was raised from 100 billion KRW to 500 billion KRW, it increased by about 17%. Compared to about 10 years ago in 2013 (32), it increased by 50%. On the other hand, the number of small and medium holding companies sharply decreased to 66 compared to 2017 (130). Small and medium holding companies are those with total assets of 100 billion KRW or more but less than 500 billion KRW.
The number of subsidiaries under holding companies was 2,274, an increase of about 12.6% from the previous year (2,020). The average number of subsidiaries per holding company increased from 5.5 in 2020 to 5.8 last year. The number of subsidiaries and sub-subsidiaries of holding companies also showed an increasing trend. The average shareholding ratio of general holding companies in their subsidiaries and sub-subsidiaries was 71.7% and 81.2%, respectively, exceeding the mandatory requirements.
The average total assets of holding companies were recorded at 2.3838 trillion KRW. The average debt ratio of holding companies was 32.7%, down 2.6 percentage points from the previous year (35.3%). 75.4% of holding companies had a debt ratio below 50%.
The total cash and cash equivalents held by general holding companies amounted to 65.8416 trillion KRW, an increase of about 19% from the previous year (55.349 trillion KRW). Holding companies belonging to conversion groups held a total of 49.0131 trillion KRW in cash and cash equivalents. Eleven holding companies holding more than 1 trillion KRW in cash and cash equivalents were all found to belong to conversion groups.
The Fair Trade Commission stated that it intends to support the market stabilization of the corporate venture capital (CVC) system of holding companies. As the establishment of CVCs by holding companies is becoming active following legal amendments, the commission aims to support the system's stabilization so that the retained funds of holding companies can flow into venture investments.
However, the Fair Trade Commission plans to monitor and improve the system to prevent holding companies from abusing it to expand the controlling family's power or for private interests. Additionally, the commission will disclose an in-depth analysis of holding companies' ownership and investment structures, internal transaction status, and revenue structures in the second half of this year.
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