A single deal with Elon Musk's Tesla Inc. propelled a little-known family to a staggering $1.2 billion fortune.
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L&F Co. Ltd., a South Korean company that produces high-nickel cathodes for electric vehicle batteries, received a $2.9 billion order from the electric car maker, causing its share price to soar 82% in the past year. As a result, the listed holdings of Hur Jae-hong and his family, the owners of L&F, have surged to over $800 million, according to the Bloomberg Billionaires index.
For years, the U.S.-based electric vehicle manufacturing giant has been using L&F's cathodes through batteries procured from LG Energy Solution Ltd. But this is the first time that Tesla has become a direct client of L&F.
Wooho Rho, an analyst with Meritz Securities Co. in Seoul, notes that L&F seems poised for further growth.
"The company’s direction is centered on technology and production efficiency, so it seems to have good DNA," Rho said. "The fact that its latest client is not just any other but the one that’s leading the market carries even greater significance."
The Hur family's roots in business go back to Hur's great-grandfather, Huh Man-jung, who cofounded LG in 1947. The conglomerate has been producing everything from consumer electronics to home appliances and batteries for electric vehicles. The family incorporated energy-to-construction giant GS Group in 2004, while L&F was established in 1968.
The Hur family's wealth has been primarily derived from the LG Group for several decades, but the latest deal with Tesla provides a major source of revenue for L&F.
This recent surge in the value of companies that provide components or materials used in electric vehicle production has brought great wealth to their owners, much like the case of L&F stocks. For example, Ryu Kwang-ji, chairman of chemical manufacturer Kumyang Co. Ltd., now has a stake worth about $1.4 billion because of the company's surge in value. Another example is EcoPro Co., a battery material producer that has increased its value by about 500%, raising Lee Dong-chae and his family's holdings to $3.1 billion.
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According to a research report by Shinyoung Securities Co. analyst Jin-soo Park, L&F is expected to reduce its dependence on LG Energy Solution for revenue to 50% by 2025. The report also suggests that unidentified manufacturers, most likely including Tesla, will contribute to 30% of the company's sales. Park views this diversification strategy positively, indicating that it could be beneficial for L&F in the long run.
While these multi-billion dollar companies, like Tesla, are often at the forefront of mainstream media. The smaller companies landing massive deals to get them where they are can often be overlooked. For example, billion-dollar organizations like Intel Corporation and Lockheed Martin Corp. have all partnered with data-compaction startup AtomBeam, which claims to increase bandwidth by up to 4x. And SAAB and the United States Airforce are actively using the technology.
These companies helping build the Tesla’s and Intel’s of the world are the ones silently able to rake in billions. And the investors able to find these hidden gems, in some instances, make off well in stocks many have never heard of.
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