Exclusive
Jung Hyang-mi, Daughter of Joongheung Group Chairman, Acquires Stake in Daewoo E&C Subsidiary Through New Entity

[비즈한국] It has been confirmed that Jung Hyang-mi (59), the eldest daughter of Joongheung Group Chairman Jung Chang-sun (83), has acquired a stake in Korea Infrastructure Management, a subsidiary of Daewoo E&C047040, through a newly established legal entity. In addition to Jung Hyang-mi, Chairman Jung Chang-sun has two sons: Jung Won-ju (57), Chairman of Daewoo E&C, and Jung Won-chul (56), Chairman of CITI Construction. The Joongheung Group has already completed its corporate spin-off into Jung Won-ju’s Joongheung Construction and Jung Won-chul’s CITI Construction. However, Jung Hyang-mi has not held a meaningful stake in Joongheung Group affiliates. This is why the business community is keenly watching whether she will establish her own territory through further stake acquisitions in the future.

In July last year, Jung Hyang-mi sold her entire 20% stake in Naju Tourism Development to Joongheung Construction. This was to facilitate the transition to a holding company system centered around Joongheung Construction. Under current law, a holding company must secure more than a 50% stake in its non-listed subsidiaries, but Joongheung Construction previously held only 20% of Naju Tourism Development. Consequently, Joongheung Construction acquired the shares from Jung Hyang-mi and others to raise its stake to 50%. Through this sale, Jung secured 54 billion KRW in cash.

BizHankook's investigation revealed that Jung Hyang-mi established a company named J&Ks in August of last year. Jung owns 60% of J&Ks, and the CEO is her son, Kim Yi-joon (30). In December of last year, Jung Hyang-mi lent 29.5 billion KRW to J&Ks. It is understood that this capital originated from the proceeds of her Naju Tourism Development stake sale.

Subsequently, in the same month, J&Ks acquired a 41.43% stake in Korea Infrastructure Management from Daewoo E&C for 30 billion KRW. Korea Infrastructure Management is an SOC (Social Overhead Capital) facility integrated operation and management company, and Daewoo E&C had previously held a 100% stake. Following the sale, Daewoo E&C’s stake in Korea Infrastructure Management was reduced to 58.57%. Kim Bo-hyun, who currently leads Daewoo E&C, is Jung Hyang-mi's husband. A Daewoo E&C official explained, "We sold the stake in Korea Infrastructure Management to improve liquidity."

Opinions are divided on whether the sale of the Korea Infrastructure Management stake will significantly help Daewoo E&C’s liquidity. As of the end of September last year, Daewoo E&C’s total assets reached 12.3255 trillion KRW. Of this, cash and cash equivalents stand at 987.7 billion KRW. Daewoo E&C is not facing an immediate liquidity crisis, meaning 30 billion KRW is not an urgent necessity.

On the other hand, there is a strong argument that 30 billion KRW cannot be ignored given the expected freezing of the construction sector this year. For example, Shindongah Construction recently filed for corporate rehabilitation after failing to repay 6 billion KRW in commercial paper. Kim Sun-mi, an analyst at Shinhan Securities, analyzed the construction industry, stating, "The fourth-quarter earnings for major construction firms in 2024 were generally sluggish," adding, "It is a time when risk management is needed more than external growth."

For Jung Hyang-mi, the growth of Korea Infrastructure Management is important. Korea Infrastructure Management’s revenue increased by 14.69% from 40.4 billion KRW in 2022 to 46.3 billion KRW in 2023. However, revenue for the first three quarters of 2024 was 34.9 billion KRW. At this rate, total revenue for 2024 is expected to be sluggish compared to 2023. Korea Infrastructure Management has been paying out 2 billion KRW in dividends annually. If the company pays out 2 billion KRW again this year, J&Ks will receive 828.54 million KRW in dividends.

The business community is focused on whether Jung Hyang-mi will take further actions. Chairman Jung Chang-sun’s eldest son, Chairman Jung Won-ju, owns 100% of Joongheung Construction. The second son, CITI Construction Chairman Jung Won-chul, has secured 100% of CITI Construction to build his own domain. However, neither Jung Hyang-mi nor her husband, CEO Kim Bo-hyun, hold a significant stake in any Joongheung Group affiliates, except for a 0.98% stake in Joongheung Construction Industry.