Kim Seung-youn Hanwha Group chairman's second and third sons, Kim Dong-Won, president of Hanwha Life, and Kim Dong-Sun, executive vice president of Hanwha Galleria, will sell part of their Hanwha Energy equity. The goal is to secure funds to pay gift tax and to invest in new businesses. Hanwha Energy sits at the top of Hanwha Group's governance structure. With eldest son Kim Dong-Kwan, vice chairman of Hanwha Group, not selling any equity, some say the group's succession structure has become more solid.
On the 16th, Hanwha Group said President Kim Dong-Won and Executive Vice President Kim Dong-Sun will sell 5% and 15%, respectively, of their Hanwha Energy equity to a consortium led by Korea Investment Private Equity (Korea Investment PE), a financial investor (FI). The transaction price is about 1.1 trillion won.
Hanwha Energy was owned 50% by Vice Chairman Kim Dong-Kwan, and 25% each by President Kim Dong-Won and Executive Vice President Kim Dong-Sun. With this transaction, the equity stakes of President Kim Dong-Won and Executive Vice President Kim Dong-Sun will decrease to 20% and 10%, respectively, and an FI holding 20% will become a major shareholder. Vice Chairman Kim Dong-Kwan will remain the largest shareholder with his 50% stake.
Hanwha Energy is an unlisted Hanwha Group affiliate and holds 22.15% of Hanwha, which serves as the group's holding company. As the chain runs "three brothers → Hanwha Energy → Hanwha → major affiliates," it is regarded as a key affiliate for controlling Hanwha Group. The fact that Vice Chairman Kim Dong-Kwan did not participate in this equity sale can be read to mean the successor's position in the group has become even more secure.
President Kim Dong-Won and Executive Vice President Kim Dong-Sun plan to use the funds raised from selling Hanwha Energy equity to pay taxes, including gift tax. Early this year, Kim Seung-youn, chairman of Hanwha Group, gifted 11.32%—half of his 22.65% equity in Hanwha—to the three brothers. The gift tax the three brothers must pay due to this gift was estimated at about 220 billion won.
They plan to invest the remaining funds in their respective areas of interest or new businesses. President Kim Dong-Won oversees the financial affiliates, while Executive Vice President Kim Dong-Sun is in charge of the retail affiliates.
Hanwha Group said, "The buyer (Korea Investment PE) plans to establish various collaboration frameworks to enhance Hanwha Energy's mid- to long-term competitiveness and increase corporate value by appointing board directors after acquiring the equity," adding, "With this equity sale, Hanwha Energy has secured a more transparent and efficient governance structure and can also expect improved financial stability and creditworthiness."
Hanwha Energy plans to enhance corporate and shareholder value through an initial public offering (IPO) and to leap forward as a global energy solutions company.