Samsung Life Insurance bought a chunk of Samsung Card from a host of the group’s other finance-related subsidiaries in what analysts see as a signal that Samsung is restructuring itself

December 23, 2013 Leave a comment

Samsung group moves suggest a restructuring

Dec 16,2013

Samsung Life Insurance bought a chunk of Samsung Card from a host of the group’s other finance-related subsidiaries in what analysts see as a signal that Samsung is restructuring itself. Samsung Life Insurance now holds 34.41 percent of Samsung Card after absorbing 5.81 percent of the card company’s shares from Samsung Electro-Mechanics, Samsung C&T and Samsung Heavy Industries on Friday, Financial Supervisory Service data showed yesterday.
Market analysts think Samsung is trying to create a finance holding firm structure centered on the cash-rich insurance subsidiary.
Samsung has yet to adopt a holding company structure, although Samsung Everland, at the top of a complex web of share cross-holdings, is considered the de facto holding company of the country’s top conglomerate.
A holding company structure, adopted by more than 100 local companies as of last year, is being encouraged by the government as a way of enhancing the transparency of corporate governance. It is also able to improve the efficiency of businesses, but can be costly for companies to comply with the law and obligations of a holding company structure.
It is also problematic for Samsung as the current Fair Trade Act bans a nonfinancial holding company from owning a financial affiliate. Samsung Everland holds 19.34 percent of the shares of Samsung Life Insurance, which holds 7.21 percent of Samsung Electronics.
The Park Geun-hye administration is pushing for an intermediate holding company law that will lift the ban, although the finance affiliate is required to be an intermediate finance holding company when the size of the finance affiliate is substantial.
The adoption of the intermediate holding firm law, analysts say, will enable Samsung to create a holding company structure without forcing Samsung Everland to sell off its stake in Samsung Life Insurance by making Samsung Everland a holding company and Samsung Life Insurance an intermediate holding company.
Samsung stirred speculation about a governance structure change earlier this year with two deals among its four affiliates: the handover of a fashion business from Cheil Industries to Samsung Everland and a merger between Samsung SDS and Samsung SNS.
On Friday, Samsung C&T, which could play a significant role in Samsung’s governance structure change, deepened the speculation by buying 5.09 percent of the shares of Samsung Engineering from Samsung SDI. Now Samsung C&T holds 7.81 percent of the shares of Samsung Engineering, becoming the second-largest shareholder of the building contractor next to Cheil Industries, which holds 13.1 percent of the shares of Samsung Engineering. Samsung C&T had no stakes in Samsung Engineering until July. Over the past six months, it spent 113.05 billion won ($107.4 million) to buy shares of Samsung Engineering.
BY MOON GWANG-LIP [joe@joongang.co.kr]

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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