Hanwha Group raises stake in KAI above 5 percent in global aerospace push

Hanwha Group raised its stake in Korea Aerospace Industries (KAI) above 5 percent on Monday as part of its push to establish a stronger footing in the global aerospace industry.

Hanwha Group's building in Jung District, central Seoul [HANWHA GROUP]

Hanwha Group raised its stake in Korea Aerospace Industries (KAI) above 5 percent on Monday as part of its push to establish a stronger footing in the global aerospace industry.

The move marks a clear step beyond financial investment and toward strategic control in Korea’s aerospace and defense sector. KAI is best known as the manufacturer of the FA-50 light combat aircraft and now the 4.5-generation KF-21 Boramae fighter jet.

Kim Seung-youn, chairman of Hanwha Group, underscored that ambition earlier this year during his first on-site management visit of 2026, when he toured Hanwha’s Jeju Space Center and said, “Going to space is Hanwha’s mission.”

Hanwha Group Chairman Kim Seung-youn [HANWHA GROUP]

Hanwha Aerospace said Monday that it had acquired an additional 100,000 KAI shares, or 0.1 percent, lifting the group's total stake to 5.09 percent.

Hanwha Aerospace and Hanwha Systems disclosed in their March business reports that they had secured a combined 4.99 percent stake in KAI last year, and the latest purchase pushed that holding above the 5 percent threshold.

Once a listed company holds more than 5 percent of another company, it must disclose the stake and its purpose to the Financial Supervisory Service. Hanwha changed the stated purpose of its KAI stake on Monday from “simple investment” to “management participation.”

“A concrete management-participation plan is under review,” a Hanwha Aerospace official said.

“If it becomes necessary to take part in the decision-making process, we plan to act as a shareholder through lawful procedures and methods in a way that aligns with the company’s management objectives, while fully taking into account the circumstances and interests of the company, shareholders and other stakeholders.”

A KF-21 fighter jet at a ceremony at the Korea Aerospace Industries headquarters in Sacheon, South Gyeongsang, on March 25. [JOINT PRESS CORPS]

Hanwha also said it plans to buy additional KAI shares worth a total of 500 billion won ($340 million) by year-end, including Monday’s purchase. Based on KAI’s closing price of 180,000 won, that would allow Hanwha to acquire roughly another 3 percent stake, lifting its total holding to around 8 percent.

That would likely put Hanwha into competition for the No. 2 shareholder position with the National Pension Service, which holds 8.12 percent, behind the Export-Import Bank of Korea at 26.41 percent.

“Expanding our stake in KAI is aimed at strengthening global export competitiveness in the defense and aerospace sectors and broadening cooperation in future aerospace businesses based on a strategic partnership between the two companies,” a Hanwha official said.

“Hanwha Aerospace has competitiveness in areas such as ground defense, aircraft engines, avionics, radar and launch vehicles, while KAI is Korea’s only complete aircraft developer and manufacturer and also has technology in satellite development and aerial combat systems, so significant synergies are expected.”

A K-9 self propelled howitzer is seen at Hanwha Aerospace factory in Changwon, South Gyeongsang, on March 16, 2023. [REUTERS/YONHAP]

Hanwha also stressed that major global space companies have already entered an era of consolidation and competition by scale.

“In Europe, Airbus, Thales and Leonardo have consolidated into three major players, and in Britain BAE Systems acquired Ball Aerospace, showing that major overseas competitors are already moving toward greater scale and complexity,” a Hanwha official said.

“For Korea as well, establishing a national champion through the combination of aerospace and defense has emerged as an inevitable task. For individual defense companies to compete alone in the global market is little different from throwing an egg at a rock.”

Morgan Stanley and others forecast that the global space industry will grow from about $300 billion in 2024 to $1.1 trillion by 2040.

“Korean firms in the space industry only generate 3.5 trillion won, or less than 1 percent of the global market,” a Hanwha official said.

“A stronger partnership between Hanwha and KAI could help the two pursue more orders under a 'one-team strategy' in the global defense and aerospace market,” he added.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom. BY KO SUK-HYUN [cho.yongjun1@joongang.co.kr]