[비즈한국] The Korea Development Bank (KDB) is pushing to sell its stake in Hanwha Ocean042660 for the first time in 25 years. Following the dissolution of the Daewoo Group in 1999, KDB secured its stake through a debt-equity swap in 2000 after Daewoo Heavy Industries (renamed Daewoo Shipbuilding & Marine Engineering in 2002) entered a workout program.
While the need to manage the BIS ratio (capital adequacy ratio) is often cited as a reason, the prevailing sentiment within and outside the KDB is that "the best time to dispose of an asset is when there is still room for it to rise." Indeed, Hanwha Ocean's stock price surged due to favorable expectations following the launch of the Trump administration in the U.S. There is an assessment that KDB Chairman Kang Seok-hoon made the decision to sell now, given that the value of the full stake amounts to 5.3 trillion won.
"Now is the Time": KDB Offloads Stake with a Smile After 25 Years
For KDB, the 19.5% stake in Hanwha Ocean had long been a headache. Although it secured the stake by leading a 1.7 trillion won debt-equity swap, significant funding support continued until Hanwha became the new owner. Of course, the bank had attempted to sell the stake several times in between. However, amidst the cycles of boom and bust, it failed to sell even after the company was acquired by the Hanwha Group. This was due to the stock price fluctuating between the mid-10,000 won and mid-20,000 won range throughout 2023.
However, the recent mention of "collaboration with the Korean shipbuilding industry" by the incoming Trump administration acted as a catalyst, sending the stock price soaring. The stock, which hovered in the 25,000 won range last August, traded at over 96,000 won this April following the launch of the Trump administration. With a more than threefold increase, KDB decided not to miss the opportunity to "dump its stake."
According to the financial sector, KDB sold approximately 4.3% of its Hanwha Ocean stake on the 28th via a block deal (after-hours bulk trading) with a discount rate applied at 8.57–9.0%. Considering the closing price of 89,300 won at the time, the sale price was between 81,300 and 81,600 won. The scale of this sale is estimated to be around 1.06 trillion won. KDB plans to sell its remaining 15.3% stake, worth approximately 5.3 trillion won, depending on future market reactions.
Within and outside KDB, the reaction is that "now is the right time" considering the "shipbuilding industry cycle." A financial authority official tipped, "KDB stepped up and injected a large amount of capital to save the shipbuilding industry. There are several long-held stakes that the bank couldn't easily sell because of the criticism that would follow if it exited at a loss, and Daewoo Shipbuilding & Marine Engineering (now Hanwha Ocean) was one of them. It seems Chairman Kang Seok-hoon, whose term ends next month, made the decision. It is said that if the remaining stake is sold at the same price as this transaction, at least double the public funds injected could be recovered."
Possibility of Selling HMM Stake as Well
The industry predicts that KDB will also push for the sale of its HMM011200 stake, considering its BIS ratio. At the end of last year, KDB’s BIS ratio was 13.9%, slightly above the financial authority's recommendation of 13%. This is the lowest among 20 domestic banks. For KDB, which plays a core role in supplying policy funds, a worsening BIS capital adequacy ratio is an inevitable burden. The bank is pursuing the sale of stakes in non-consolidated subsidiaries as a solution, as it can reduce risk-weighted assets (RWA).
Because of this, the possibility of selling HMM, in which KDB holds a 33.7% stake, is also being discussed. Driven by the recent K-shipbuilding boom, HMM’s stock price, which traded at the 15,000 won range last November, reached 22,600 won in March of this year. Although it has recently pulled back to the 18,000 won range due to corrections, many analyze that KDB will aim to improve its capital adequacy ratio by disposing of these shares.
The aforementioned financial authority official forecasted, "KDB has served as a pillar for a long time by injecting public funds whenever the shipbuilding industry was in a recession, but it struggled with stake sales or M&As even during boom cycles. Selling HMM is much more difficult (than the Hanwha Ocean sale), but now that they've encountered favorable news from the U.S., they will likely try to slim down by selling non-management stakes."