The line of succession in the SM Group is being drawn around Woo Gi-won, the youngest son of Chairman Woo Oh-hyun, who is the CEO of SM HiPlus. However, the complex structure of the SM Group subsidiaries entangled in circular investment (a structure of corporate control through links like A→B→C→A) suggests that sorting out the governance structure in the short term will not be easy.
Chairman Woo has one son and four daughters. His eldest daughter is Woo Yeon-ah, CEO of Samra Farm; his second daughter is Woo Ji-young, CEO of HN E&C; his third daughter is Woo Myung-ah, CEO of Shinwha D&D; his fourth daughter is Woo Geon-hee, CEO of Konis; and his youngest son is Woo Gi-won, CEO of SM HiPlus. As Chairman Woo enters his mid-70s, there are talks that the clock for the succession has sped up. The governance structure will be managed by the planning department of the SM Group.
The SM Group has expanded its business through mergers and acquisitions (M&A). As they acquired new companies with subsidiary funds or improved the financial structure by adding profitable companies to those in deficit, the equity structure became complicated. In order for Chairman Woo's equity to be transferred to CEO Woo, a massive equity restructuring among subsidiaries will be necessary.
The succession at the SM Group is expected to conclude once the subsidiaries are organized around Samra Maidas, which is owned 100% by a father and son duo, and Chairman Woo's equity is transferred to CEO Woo. Chairman Woo owns 74% of Samra Maidas, while CEO Woo holds 26%. An ownership structure diagram shows that equity in 58 subsidiaries is tangled around Chairman Woo.
CEO Woo is building experience in key subsidiaries. In November 2022, he took the role of head of the shipping division at the SM Group, and last year he moved to SM HiPlus. The time he served as the head of the shipping division coincided with a boom in the shipping industry, during which affiliated companies including SM Shipping, Korea Line Corporation, and Dongbang Transport recorded unprecedented performances.
SM HiPlus, where CEO Woo has moved, is known for operating a highway Hi-Pass service and is considered a key subsidiary. As of the end of last year, SM HiPlus had total cash and cash-equivalent assets of 58.3 billion won, an increase of 35.6 billion won over the year.
The personal company Najin, in which CEO Woo holds 100% equity, may also be utilized in the succession. Growing Najin allows for the acquisition of equity in major subsidiaries of SM Group or exchange of equity through mergers. This year, Najin has borrowed hundreds of millions of won in operating funds from SM Group subsidiaries including Gyeongnam Corporation (3.164 billion won), SM Asset Development (31 billion won), and Samra Maidas (689 million won) to purchase real estate or attempt corporate acquisitions.
Aside from CEO Woo, Ms. Woo Ji-young is also utilizing her personal company HN E&C (formerly Taecho E&C) to mobilize funds from SM Group subsidiaries. HN E&C has borrowed 49.8 billion won from SM Shipping to operate its business.
When HN E&C undertakes real estate development, one of the SM Group construction companies manages the construction. HN E&C was in charge of the construction of the Cheonan Station Gyeongnam Honoursville Urban Heights, and the construction company was Samhwan Corporation, a construction affiliate of the SM Group. After recording an operating loss in 2023, HN E&C achieved a revenue of 86.1 billion won and an operating profit of 27.8 billion won last year with revenue starting to flow in.
An SM Group official noted regarding the succession that "nothing has been decided yet."