Top 30 chaebols increase investment

Owing to the government`s chaebol reform policy, the ownership and management structure of the top 30 groups saw improvement in the last year. Internal shareholdings and the number of affiliates have dropped significantly. However, the surge of investments into affiliated companies and total investment volume, there still remains risk of simultaneous deterioration.

The total investment volume for the top 30 groups as of April 15th rose by 16 trillion won to 45.9 trillion won. 19 groups including the Big 4 recorded an increase in investment volume.

In particular, revolving investments made to support unhealthy affiliates or reinforce owner management influence has increased to 34.6 trillion won and this amount is considerably higher than 1998`s 15.2 trillion won and 1999`s 26.1 trillion won. The increase of investments was mainly due to the participation in capital increase with consideration, accounting for 45.6% of the total investment amount. Around 7 trillion won of the capital injection amount was made in relation to financial restructuring efforts (reduction of debt ratio) and most of it is attributed to the top 4 groups.

According to the Fair Trade Commission, the reason for the decreased internal shareholding despite the increase in total investments was the disposition or merger of companies with high internal shareholding ratios and the procurement of foreign investment. The internal shareholding at 43.4% is still deemed to be high, showing no real changes.

The shareholdings held by the chaebol leaders are as follows; Choi Tae Won of SK 3.1%, Cho Choong-Hoon of Hanjin 2.2%, Chung Joo-Young of Hyundai 0.9%, Lee Kun-Hee of Samsung 0.6% and 0.4% for Koo Bon-Moo of LG.