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Posco is pushing for a transition to a holding company structure, with the example of US tech giant Google’s restructuring to Alphabet in mind, as the South Korean company seeks to find new growth drivers beyond its mainstay steel business.

In a regulatory filing on Friday, the company said it would separate its steel business via a split-off, in which an existing entity will become a holding company and a newly created business entity will become its wholly owned subsidiary.

After the planned separation, which is subject to shareholder approval, Kospi-listed Posco will change its name to Posco Holdings.

At the same time, it intends to keep its newly created steel subsidiary private so that the subsidiary’s financial performance could be reflected solely in the holding company’s operations. This is the reason that Posco believes there would be little objection to the proposed split-off from existing shareholders.

It is said that the 2015 restructuring of Google into Alphabet served as a reference in Posco’s shift to a holding company structure. The Nasdaq-listed tech giant changed its name and company structure six years ago, housing Google and other fledgling businesses under the umbrella of Alphabet. Google shares converted to Alphabet shares.

But unlike Alphabet whose subsidiaries are all privately held, several of the South Korean steel major’s subsidiaries, such as Posco Chemical and Posco International, are already listed on the local stock exchange.

Meanwhile, although Alphabet owns more than 10 unlisted subsidiaries, Google is the one responsible for most of its revenue. Some say this could support Posco’s logic that its publicly traded subsidiaries would have little impact on the holding company’s value as long as its core steel business remains private.

Google’s restructuring was to give its top leadership more time to invest in new businesses to find new growth drivers beyond its core search engine service, while letting other senior executives run the daily operations of its main businesses. Posco’s transition to a holding company has the same purpose.

The stock price of Alphabet has steadily moved upward over the last six years. Alphabet’s market value exceeded $1 trillion in January 2020 to become the fourth US firm ever to achieve the mark after Apple, Amazon and Microsoft. In November this year, it joined the $2 trillion club alongside Apple and Microsoft. (Reporting by Eun-a Jo)