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[SUPER RICH] Booyoung chief amasses fortune by staying true to roots

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Published : 2014-06-09 20:58
Updated : 2014-06-09 20:58

When Booyoung Group chairman Lee Joong-keun vied for sponsorship of the nation’s 10th baseball team with KT Corp., the nation’s second-largest mobile carrier, in early 2013, it was a wakeup call for many about just how rich the usually low-key business tycoon was.

At the time, the 73-year-old chairman, who usually chooses to remain in the shadows, greeted the media with open arms, even donning a baseball cap to show how serious he was about owning the team. He also confidently addressed the concerns about Booyoung’s financial capacity, saying the company was fully capable of supporting the new baseball team for at least the next three decades. 

He cited the company’s abundant funds ― it sets aside up to 60 billion won ($59 million) for corporate responsibility efforts every year ― and also said he would dip into his private coffers if and when necessary.

As of April 2014, the Booyoung Group chairman was the ninth-richest man in South Korea, with a net worth of $1.94 billion, according to Forbes magazine.

Some capital market watchers believe Lee could move up to third place in the country’s wealth rankings, following Samsung Group chairman Lee Kun-hee and Hyundai Motor chairman Chung Mong-koo, should Booyoung Corp., the group’s de facto holding company, become listed on the stock market. The chairman currently holds a stake of about 74 percent in Booyoung Corp.

This scenario is unlikely, however, since the Lee has no intention of listing any of the group’s 14 affiliates.

Behind the success of the self-made billionaire is his unshakable determination to bet on a single core business.

Founded in 1983 by Lee, Booyoung has remained true to its roots in the construction business. The company’s specialty is building rental apartments for low-income families outside of Seoul.

This singular growth strategy reflects Lee’s management philosophy, known as the “tricycle” theory: though three-wheelers are not as speedy as two-wheelers, they are much more stable.

As such, Booyoung’s rental housing business has never had a dramatic growth curve, but then again, it also has never experienced a noticeable downturn.

Based on the steady and gradual growth of its core business over the past few decades, Booyoung Group’s assets have continued to expand. As of the end of 2013, it has reached 15.7 trillion won, boosting the group’s corporate ranking to 20th place when excluding state-run enterprises, according to data from the Fair Trade Commission.

“Considering the improved corporate status in Korea, chairman Lee now cares more about employee welfare and has become an avid supporter of corporate responsibility activities,’’ a corporate insider said.

In May, Booyoung Group raised the average annual employee salary by up to 10 million won ($9,828) following Lee’s decision to meet the level of paychecks given at the nation’s top 10 builders.

Last week, Lee further flaunted his wealth by donating 2 billion won to families of the Sewol ferry disaster victims. The amount equaled donations by CJ Group as well as Shinsegae Group.

Along with his improved corporate reputation, Lee now faces a myriad of choices, including what kind of new growth engines to groom to move up to the next level both in terms of revenue and management transparency, industry watchers said.

New challenges lie ahead amid a dwindling demand for rental apartments, and Booyoung appears to be trying to find a way out by investing in the leisure business. To this end, it has been slowly taking over country clubs, hotels and resorts in the country over the past few years. Overseas ― particularly in Southeast Asia ― it is tapping into business opportunities in foreign rental housing markets.

Industry watchers, for now, believe it will take some time for Booyoung to reap the returns on such new investments.

Booyoung also is pressed to achieve management transparency when Lee eventually transfers his authority to his successors.

Lee has three sons and one daughter, but it is unknown whether any are capable of stepping in for the chairman.

By Seo Jee-yeon (jyseo@heraldcorp.com)

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