[Their Own Wealth Succession] Shinan Group | Leading Listed Company 'Husteel'... Successor Structure Uncertain

Chairman Park Soon-seok's Share Succession Still Pending
Construction, Golf, and Manufacturing Affiliates Supported Through Internal Transactions and Fund Loans

Attention is focused on the succession process of Park Soon-seok (79), the founder of Shinhan Group, a mid-sized company ranked around 60th in the business world. Within the business community, there is an opinion that the eldest son will inherit construction, manufacturing, and golf businesses, while the second son will take over the financial sector. However, since Chairman Park still holds most of the group's shares, it remains unclear how he will directly transfer ownership of the company.

Shinhan Group is a mid-sized conglomerate ranked around 60th in the business world, operating businesses such as construction, golf & resorts, manufacturing & services, finance, and hotels. Park Soon-seok, originally from Sinan, Jeollanam-do, started in construction in 1960 and built the current Shinhan Group. As of the end of last year, the group officially has 21 affiliates. Notably, Shinhan Group owns numerous golf courses including Ribera CC, Greenhill CC, Sinan CC, Welli Hilli CC, and Everris GC, earning Chairman Park the nickname "Golf Course Tycoon."

Shinhan Group's governance structure is centered around 'Shinhan,' which is 100% owned by Park Soon-seok. Most affiliates are either directly owned by Chairman Park or have management participation from him, securing his control.

The group's main affiliate is Hu Steel. Hu Steel is the only KOSPI-listed company among Shinhan Group affiliates. Shinhan Group acquired Hu Steel in 2001. Hu Steel specializes in manufacturing and selling steel pipes, a sector within the steel industry. As of the end of last year, it recorded sales of 1.03 trillion KRW and an operating profit of 289.2 billion KRW.

Chairman Park holds 24.79% of Hu Steel's shares, with his eldest son, CEO Park Hoon (54), owning 3.78%, and his second son, Director Park Ji-ho (51), holding 2.89%. Previously, Park Hoon held 3.76% and Park Ji-ho 3.02%, but after a rights offering at the end of last year, Park Ji-ho's shareholding decreased.

Additionally, Chairman Park's wife and six daughters, as related parties, each hold around 1% of shares, while Shinhan owns 5.3%, and affiliate Green C&F Loan holds 3.99%. The total shareholding of Chairman Park and related parties amounts to 49.23%.

Although Chairman Park holds most of Hu Steel's shares, management is led by his eldest son, CEO Park Hoon. After acquiring Hu Steel, Shinhan Group operated with a non-executive board including Chairman Park and his two sons, Park Hoon and Park Ji-ho, until late 2014 when Park Hoon was appointed as full-time vice president.

Park Soon-seok, Chairman of Shinan. Photo by Asia Economy DB

Subsequently, Park Hoon became CEO of Hu Steel in 2016. The business community views this as a transfer of management rights to Park Hoon amid owner risks arising from legal issues. Meanwhile, Park Ji-ho remained in a non-executive director position.

Besides Hu Steel, Park Hoon is registered as a director in affiliates such as Shinhan, Shinhan Development, Shinhan Tourism, Shinhan Tourism Development, Shinhan Cosmetic, and Shinhan Comprehensive Resort. This means Park Hoon directly or indirectly manages Shinhan Group's construction, golf & resort, and manufacturing & service sectors.

Chairman Park also supports Park Hoon materially and financially through affiliates. For example, Hu Steel channels work orders to Shinhan Cosmetic, where Park Hoon is an inside director. As the name suggests, Shinhan Cosmetic is a cosmetics manufacturer, but most of its revenue comes from affiliate transportation services.

Shinhan Cosmetic recorded sales of 12.7 billion KRW from Hu Steel last year. Considering its total sales were 12.4 billion KRW in 2021, most of its revenue comes from Hu Steel. The company's CEO is Park Seo-yeon, a related party of Chairman Park, and inside directors include Park Hoon and Min Young-min, CEO of Shinhan Comprehensive Resort.

Park Hoon also leads Preville as CEO, which receives support from Shinhan Group. At the end of 2021, Shinhan, the group's holding company, lent 99.2 billion KRW to affiliate Green C&F Loan. Green C&F Loan, 96.6% owned by Chairman Park and Shinhan, re-lent most of the borrowed funds to affiliates.

Among these, 29 billion KRW was loaned to Preville, led by Park Hoon. The use of these funds is undisclosed. Preville is engaged in real estate development such as housing. Currently, Park Hoon serves as CEO only of Hu Steel and Preville within Shinhan Group.