Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
State lender speeds up sales of HMM, KDB Life Insurance again
The headquarters of the state-run Korea Development Bank (KDB) in Yeouido, Seoul / Korea Times file
By Yi Whan-woo
By Yi Whan-woo
Korea Development Bank (KDB) is speeding up efforts to sell off a string of tax-financed companies, including HMM and KDB Life Insurance, after repeatedly making multiple, unsuccessful attempts to do so.
Since April, the state-run KDB took an aggressive move to privatize the firms that had been under its control for years, as witnessed in the completed sales of Daewoo Shipbuilding and Marine Engineering (DSME) to Hanwha Group for about 2 trillion won.
Hanwha Group's takeover of DSME, now rebranded as Hanwha Ocean, came after months of talks between the conglomerate and KDB, which injected more than 4.2 trillion won into the debt-ridden shipbuilder over 21 years and yet failed five times to close a sales deal.
The largest shipping line in Korea, HMM became the latest sales target, Thursday, when the KDB announced a plan to sell a combined 38.9 percent stake in HMM owned by the lender and the Korea Ocean Business Corp. (KOBC), also a state-run firm
The stakes up for sale are equivalent to 399 million shares, which are estimated to be worth up to 5 trillion won.
The sales will be made through a two-stage bidding process, to select a preferred suitor and sign a legally binding agreement within this year.
In a joint statement, the KDB and KOBC said their sales notice was made to “cope with the rapidly-changing shipping business preemptively and to ensure HMM's global competitiveness.”
Some industry sources assessed such a privatization move as “very aggressive,” noting global container shipping businesses have faced a downturn since the latter half of 2022 as shipping costs return to pre-pandemic levels.
The source also noted the sales of HMM stakes involve perpetual bonds, which market observers say make it complicated for a would-be buyer to acquire management rights from the KDB and KOBC.
“The fact that the KDB is pushing to sell HMM despite these obstacles indeed shows its strong willingness for privatization of the firms it controls,” a source said.
Another source indicated the sales notice of the shipping company came a just week after the KDB selected Hana Financial Group as the preferred bidder to acquire KDB Life Insurance.
The KDB is the main creditor and also the largest shareholder of KDB Life Insurance with a 92.7 percent stake.
The life insurer has been a headache for the lender as it failed to be sold five times after having more than 1 trillion won injected into the company since 2010.
Back then, KDB acquired the major stake in the company, formerly Kumho Life Insurance, from the financially-troubled Kumho Group in the group's restructuring efforts.
The sales price of KDB Life Insurance is estimated to be approximately 200 billion won.
And due to its debt, worth around 16 trillion won at the end of the first quarter, sources speculate 1 trillion won in total would be required for a successful buyer to normalize the insurer.