이 기사는 2021년 07월 13일 07:53 thebell 에 표출된 기사입니다.

Jungheung’s acquisition of Daewoo E&C is expected to be made through its civil engineering arm, which is wholly owned by the eldest son of the conglomerate’s founder, a move seen as part of the South Korean family-run construction group’s succession plan.

Jungheung Building Construction and Jungheung Civil Engineering & Construction are the two largest companies under the Jungheung umbrella. The former is 76.74% owned by the group’s founder and chairman Jung Chang-sun, while the latter is 100% owned by his eldest son and vice chairman Jung Won-ju.

As recently as a dozen years ago, Jungheung Civil Engineering & Construction played only a secondary role in construction projects led by Jungheung Building Construction. But that has changed since 2011, with the civil engineering unit expanding its role from purchasing land to overseeing construction work. Jungheung Building Construction financially supported the unit by providing credit guarantees.

As a result, Jungheung Civil Engineering & Construction has grown rapidly, with its non-consolidated revenue increasing from a mere 10.3 billion won in 2009 to more than 100 billion won in 2012. It recorded revenue of 616.8 billion won in 2015, exceeding Jungheung Building Construction’s revenue of 517.2 billion won.

The revenue gap has widened to nearly 500 billion won, with the civil engineering unit posting 1 trillion won in revenue in 2020. Its total assets also grew to 2.04 trillion won on a non-consolidated basis at the end of 2020, versus 854 billion won for Jungheung Building Construction.

The rapid growth of Jungheung Civil Engineering & Construction, which is wholly owned by vice chairman Jung Won-ju, was part of the conglomerate’s succession plan, industry watchers said.

Chairman Jung Chang-sun is the largest shareholder in Jungheung Building Construction with a 76.74% stake and in three other affiliates – Jungheung Housing (94.65%), Jungheung Building Construction Industry (78.12%) and Seheung Construction (67.32%). The combined assets of the four companies amounted to 1.52 trillion won at the end of 2020.

His son, Jung Won-ju, owns Jungheung Civil Engineering & Construction alongside its 10 subsidiaries as well as 55% of SM Development Industrial. The sum of the assets of the two companies totaled 2.06 trillion won at the end of 2020.

With Jungheung Civil Engineering & Construction continuing efforts to grow in size, Daewoo E&C is also likely to be placed under the company. This will also likely accelerate the family-controlled conglomerate’s succession plan.

“Chairman Jung Chang-sun is still the final decision maker, but his son now has larger holdings in the conglomerate’s affiliates,” said an industry insider. “Daewoo E&C’s takeover by Jungheung Civil Engineering & Construction could further strengthen management by the second generation of the Jung family.” (Reporting by Jin-young Ko)