Korea’s Hanwha Aerospace, involved in a capital increase, has decided that Hanwha Energy and others will participate through a third-party allocation. Consequently, the scale of the paid-in capital increase targeting general shareholders will decrease from 3.6 trillion won to 2.3 trillion won. This move aims to directly counter suspicions that the funds raised are for a major shareholder’s succession process, while also addressing shareholder discontent arising from the capital increase.
Hanwha Aerospace announced on the 8th through an amended disclosure that it is considering a third-party allocation involving Hanwha Energy, Hanwha Impact Partners, and Hanwha Energy Singapore. If this capital increase is finalized, Hanwha Energy, whose major shareholders are the three sons of Hanwha Group Chairman Kim Seung-yeon, will acquire stocks worth 1.3 trillion won at the market price without a discount.
This amount matches what Hanwha Aerospace previously paid when acquiring a stake in Hanwha Ocean from Hanwha Energy in February, thus reintroducing the same amount back into Hanwha Aerospace and potentially dispelling controversy surrounding succession funds.
On the same day, Hanwha Aerospace held a board meeting and reduced the shareholder-allocated capital increase from 3.6 trillion won to 2.3 trillion won, intending to subsidize some funds through a third-party allocation via Hanwha Energy, thereby reducing the financial burden on existing shareholders. Minor shareholders can participate at a 15% discount to the market price. A Hanwha representative remarked, “The major shareholders of Hanwha Energy are sacrificing, and minor shareholders of Hanwha Aerospace benefit.”
The company explained that the structure, where major shareholders participate at market price and minor shareholders receive discounts, contributes to enhancing shareholder value. They emphasized that the recent capital increase aims purely at business expansion. Hanwha Aerospace CEO Son Jae-il stated, “The acquisition of Hanwha Ocean shares was a strategic business decision,” expressing disappointment at linking this to management succession. He reiterated a focus on strengthening core business competitiveness.
Hanwha Aerospace is currently concentrating on expanding global competitiveness in defense, shipbuilding, marine, and energy sectors. Since acquiring Doosan DST in 2016, Hanwha Aerospace has diversified its defense portfolio into self-propelled artillery, armored vehicles, and anti-aircraft systems, further strengthening capabilities in guided missiles and ammunition by merging with Hanwha Corporation’s defense division in 2022. Additionally, the acquisition of Hanwha Ocean fast-tracks transformation into a comprehensive defense company by expanding into marine defense.
In this context, the additional share acquisition of Hanwha Ocean in February was intended to enhance global bidding competitiveness through a “land-sea-air package sales” strategy. Hanwha Aerospace and its subsidiary Hanwha Ocean believe that integrating solutions for bids will be advantageous in securing multimillion-dollar defense contracts overseas. Hanwha Aerospace plans to invest a total of around 11 trillion won in the medium to long term, focusing on establishing local production bases in Europe and the Middle East, eco-friendly shipping, R&D, and ground defense and aerospace infrastructure. Approximately 3.6 trillion won will be sourced from capital increases, with the remaining 7 trillion won from cash flow and financial procurement, as reported by journalist Ko Eun-gyeol.