Taekwang's rapid expansion seen as signal of disgraced owner's return

Taekwang Industrial's headquarters in Seoul / Courtesy of Taekwang Industrial

Taekwang Group has continued its expansion across industries, fueling speculation that its former chairman may soon return to management and begin handing over control of the petrochemical-to-financial conglomerate to his children.

According to industry officials on Monday, a consortium led by Taekwang Industrial — the group’s key unit — has recently emerged as the strongest candidate to acquire K Shipbuilding, after HJ Shipbuilding & Construction and Pavilion Private Equity dropped out of the main bid.

Although TPG withdrew from the Taekwang Industrial-led consortium in February, the Korean company found another partner and moved closer to entering the shipbuilding industry.

In March, Taekwang Industrial completed the acquisition of Aekyung Industrial, a soap and toothpaste maker, following its purchase of Courtyard by Marriott Seoul Myeongdong last December. The process to acquire Dongsung Bio Pharm has been underway since January.

Taekwang Industrial is expected to mobilize its real estate, valued at more than 1 trillion won ($664 million), and cashable assets, which totaled 426.5 billion won as of the end of last year.

“We plan to invest around 1.5 trillion won to acquire and establish companies in cosmetics, energy and real estate development,” the company said in a regulatory filing Thursday.

Former Taekwang Group Chairman Lee Ho-jin

Industry officials view the recent acquisitions as decisions influenced by former Taekwang Group Chairman Lee Ho-jin, who currently serves as an adviser to Taekwang Industrial.

Given that Lee’s children hold shares in a private equity firm involved in many of the deals, the acquisitions are also being interpreted as a step to help them secure the funds needed to inherit their father’s company in the future.

Taekwang Group, however, has denied such speculation.

On Wednesday, Taekwang Industrial’s board of directors appointed two new co-CEOs, following the company’s victory over an activist fund at the previous day’s general shareholders’ meeting.

Although activist investors urged Lee to register as a director for more accountable management, Taekwang Group rejected the proposal, citing his health condition.

Lee served prison time for alleged embezzlement and was released in 2021. After receiving a presidential pardon in 2023, he regained his eligibility to return to management.

He also drew controversy in 2018 when it was revealed that he spent most of his three-and-a-half-year prison term outside jail due to medical bail.