EXCLUSIVE HanmiGlobal targets 3 M&A deals
By Park Hyong-ki
HanmiGlobal Chairman Kim Jong-hoon / Courtesy of HanmiGlobal
HanmiGlobal is expected to complete three mergers and acquisitions (M&A) deals in the United States, Europe and Asia this year, the company’s founder and Chairman Kim Jong-hoon said.
This is part of its drive to further expand overseas, he said. Korea’s top construction management company has a presence in 55 countries.
“As a listed company, even though we cannot go into specifics, HanmiGlobal is planning to make a maximum of three acquisitions through its U.S.-based Otak in the latter half of this year,” Kim said in an interview with The Korea Times.
“Doing M&As and forming joint ventures have always been a crucial part of our global business model.”
HanmiGlobal acquired Otak, an architecture and engineering firm in Oregon in 2011, when Hanmi and U.S.-based Parsons parted. HanmiGlobal was formerly HanmiParsons, a former joint venture here.
Otak will be negotiating and making the deals, each one in the three regions, like it acquired two companies ― Day CPM and Loris and Associates ― in the U.S. last year, Kim said.
HanmiGlobal’s role in the three deals will only extend to taking part in the decision-making and providing financial support.
It will use its own internal resources to finance the deals, he said, noting that when the company acquired Otak, it financed it through issuing convertible bonds.
And the targets HanmiGlobal mostly goes for are engineering, design and construction management services ― the “software side” of the business that have an annual gross profit of 25 percent on average.
“We will use our own financial resources for the deals. However, for construction development, the company uses banks for project financing,” he said.
The company has cash and cash equivalents of 24.8 billion won as of the end of September last year, according to its financial statements.
Kim is the biggest shareholder with a 10.49 percent stake in the company. The state-run National Pension Service is also one of its key stakeholders.
HanmiGlobal’s joint venture with Al Akaria, Saudi Arabia’s state-run real estate company, recently won a deal to manage 13 construction projects in Riyadh and Jeddah. The projects range from building residential and commercial to resort areas in the cities.
This follows Al Akaria Hanmi securing construction management of a mega residential-commercial complex on nearly 7 million square meters of land near Riyadh in early January.
Kim also said the company is interested in forming a fund with potential partners and invest in tech startups in the sector.
He stressed Korean companies should be more open toward cross-border M&As.
“Koreans have a tendency to be negative toward M&As, which are a very important part of growth and ecosystem development,” the chairman said.
“If you look at the history of today’s well-known companies such as General Electric, they became big and global through M&As.”
Kim is locally often referred to as the “missionary and the first generation of construction management.”
He founded his company in 1996 when the country started to implement rules enforcing construction and engineering companies to have their projects managed and audited by construction management services firms to ensure safety.
This came after the collapse of Seongsu Bridge in 1994, the Daegu Subway Line 1 gas explosion and the collapse of Sampoong Department Store in 1995.
HanmiGlobal is also noted for its employee welfare system, including allowing its long-term workers to take months-long paid vacations. Kim himself is an avid traveler.
The company took part in the construction management of Alpensia Resort, one of the venues for the 2018 PyeongChang Olympics, and Lotte World Tower, Korea’s first super high-rise building.