South Korea’s industrial conglomerate Hyosung Group that owns a wide range of businesses from textile, industrial materials, chemical, heavy machinery, construction to trade would benefit if it transforms into a holding structure, according to some market experts.

Lee Sang-heon, a researcher from HI Investment & Securities Co., suggested in his report on Tuesday that Hyosung Group would consider demerging its diversified business units and creating a holding entity in the latter half of this year, citing sound performance of its businesses in recent years.

Among various scenarios, Hyosung would designate the strongest-performing business unit as a holding company after breaking up its businesses, or set up a new holding entity that is responsible only for investment business, according to the local brokerage industry.

Such speculation over Hyosung’s possible transformation into a holding structure has loomed after the family-controlled conglomerate embarked on the third-generation management this year. Cho Hyun-joon, chairman of the Korean textile giant Hyosung Corp. and the first son of former Chairman Cho Suck-rai, holds the largest 14.2 percent stake in the company and his brother Cho Hyun-sang, Hyosung President, owns a 12.2 percent stake. Their father Cho Suck-rai has a 10.1 percent stake. Lee expected the two sons would raise their stakes to strengthen their ownership of the group after adopting a holding structure.

However, some analysts believe the group doesn’t have to reorganize its businesses under a holding company. Kim Joon-sup from Eugene Investment & Securities Co. said that the group doesn’t have any incentive for creating a holding structure that costs a lot as the owners already hold enough stakes to control the group.

The group is also reported to say that the realignment plan has never been put on the agenda during its recent board meetings.

By Yoon Jin-ho and Kang Young-woon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]