Exclusive
SM Group Affiliate HN E&C Sells HNiX, an IT Firm Dealing with 범현대가 (Pan-Hyundai) Companies

[비즈한국] It has been confirmed that HN E&C (formerly Taecho E&C), an affiliate of the SM Group, has sold its entire 59.74% stake in HNiX. HNiX is a comprehensive IT service provider with annual revenue exceeding 70 billion won. It secures a stable revenue stream by counting companies from the 범현대가 (Pan-Hyundai family), such as HD Hyundai267270, HDC Hyundai Development Company294870, and HL Holdings060980, among its clients. Some speculate that HN E&C sold HNiX due to a lack of interest in the information technology (IT) business. The SM Group did not disclose a specific position regarding the reason for the HNiX sale.

SM Group affiliate Taecho E&C acquired HN Inc (formerly Hyundai BS&C) last year. Following the acquisition, Taecho E&C absorbed and merged with HN, changing the name of the merged entity to HN E&C. Taecho E&C was led by CEO Woo Ji-young (47), the second daughter of SM Group Chairman Woo Oh-hyun (72), who has since stepped down. Former CEO Woo had held a 100% stake in the company, and she currently owns all shares of HN E&C. Since stepping down as auditor of major SM Group affiliates late last year, it is assessed that former CEO Woo is effectively pursuing independent management centered on HN E&C (Related article: [Exclusive] Second Daughter of SM Group Chairman Resigns as Auditor of Major Affiliates).

In the past, HN's largest shareholder was Chung Dae-sun, the former president of HN known as the husband of former announcer Roh Hyun-jung, but it was sold to Taecho E&C due to financial difficulties. Former President Chung has faced continued hardship, with his Seongbuk-dong residence being put up for auction earlier this year.

Amid this, it was confirmed that HN E&C sold its entire 59.74% stake in HNiX and 12.50% stake in HN Innovalley this past May. Consequently, HNiX has been excluded from the SM Group affiliates list since May. Initially, HN held the stakes in HNiX and HN Innovalley, but after Taecho E&C acquired and absorbed HN, the stakes in both companies became the property of the merged entity, HN E&C.

In the case of HN Innovalley, even if HN E&C sells its stake, it does not significantly impact management control. As of the end of last year, HN Innovalley’s shareholders consisted of: Chung Dae-sun (28.57%), Asan Foundation Chairman Chung Mong-joon (19.64%), KCC002380 Chairman Chung Mong-jin (19.64%), Hyundai General Metal Chairman Chung Mong-seok (19.64%), and HN E&C (12.50%). Given the ownership structure, it was difficult for HN E&C to exert management control over HN Innovalley.

The situation is different for HNiX. As of the end of last year, HNiX’s shareholder composition was: HN E&C (59.74%), Chairman Chung Mong-joon (11.75%), HL Holdings (10.39%), Hyundai Material (8.95%), Chairman Chung Mong-jin (5.17%), and Trion America (4.00%). Since HN E&C is selling its stake in HNiX, the largest shareholder changes, resulting in a shift in management control.

HNiX was spun off from HN in 2022. At the time, HN decided that the original entity would handle the construction business, while the IT business would be transferred to the new entity, HNiX. HNiX currently conducts comprehensive IT service businesses, including System Integration (SI), IT outsourcing, IT consulting, and solutions. According to audit reports, HNiX recorded 72.5 billion won in revenue and approximately 100 million won in operating profit last year.

A notable point is that HNiX CEO Cha Dong-won has remained in his position even while Taecho E&C acquired and subsequently re-sold HNiX. Since its launch in 2022, CEO Cha has led the company without interruption. When CEO Cha was first appointed, HNiX was under the control of former President Chung Dae-sun. In other words, it was former President Chung who initially selected CEO Cha. Because of this, speculation has arisen that HN E&C may have sold the HNiX stake to former President Chung or his allies.

However, HN E&C did not disclose to whom it sold the HNiX stake. BizHankook inquired with the SM Group regarding the HNiX sale but received no response. An HNiX official also stated, "We do not disclose information related to shareholder relations."

HN E&C's core business is construction. Last year, all of its revenue was generated from real estate sales and construction services. Recently, it appears they are also showing interest in the chemical business. In June, HN E&C absorbed and merged with its subsidiary, the management consulting firm SM Holdings. SM Holdings acquired Hans Intech, a synthetic resin film manufacturer, last year. Following HN E&C's absorption of SM Holdings, Hans Intech also became a subsidiary of HN E&C.

Regarding HN E&C's sale of HNiX, some interpret it as former CEO Woo Ji-young having little interest in IT firms. In fact, while the SM Group manages numerous affiliates, most are related to construction, shipping, and manufacturing, and it is difficult to find IT-focused affiliates.