April 16, 2024

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[THE INVESTOR] Hi Investment & Securities, a brokerage affiliated with Hyundai Heavy Industries, said in an Aug. 25 report that a change in Hyundai Motor Group’s corporate governance is expected in the near future, with the focus shifting to Hyundai Mobis and Hyundai Glovis.

The two firms have central roles in the succession of managerial control over Hyundai Motor Group from incumbent Chairman Chung Mong-koo to his son Eui-sun. 

Hyundai Motor Group’s corporate governance has a circular investment structure, from Hyundai Mobis to Hyundai Motor to Kia Motors and back to Hyundai Mobis. Hyundai Glovis’ role is as a cash cow for Chung Eui-sun, as he holds a 23.3 percent stake in the firm.

Now that the opposition political party is expected to propose a revision to current fair trade laws to ban the current circular investment structures at large industrial groups, Hyundai Motor Group may also be affected, according to analysts.

“The best bet is to form a holding company,” Hi Investment said in the report. ”In order to do that, Hyundai Mobis, Hyundai Motor and Kia Motors must be divided into investment and business divisions, with the goal of merging the investment divisions to form a holding company, tentatively named Hyundai Motor Group Holdings. 

At the same time, the brokerage suggested that Hyundai Glovis could be merged with Hyundai Motor Group Holdings so that Chung Eui-sun can make the most of his stake. Or an investment may be made into Hyundai Motor Group Holdings with Chung Eui-sun’s Hyundai Glovis stake, so that he may solidify his hold over the holding company, the brokerage report said.

By Kim Ji-hyun (jemmie@heraldcorp.com)