Hoban's expansion draws attention amid antitrust probe

Hoban Group Chairman Kim Sang-yeol / Courtesy of Hoban Group

By Park Jae-hyuk

Hoban Group has come under the spotlight for its aggressive investments in various sectors in recent years, despite the Fair Trade Commission's (FTC) ongoing antitrust investigation into Chairman Kim Sang-yeol, according to industry officials Tuesday.

Earlier this week, Hoban Construction signed a contract with Korea Corporate Governance Improvement Fund (KCGI) to acquire a 13.97 percent stake in Hanjin KAL.

The Seoul-headquartered builder, which got its start in Gwangju, also won the right to become the second-largest shareholder of Korean Air's holding company by acquiring an additional 3.44 percent stake from the local private equity firm.

However, the purpose of its acquisition at this moment was a “simple investment” rather than a “general investment” that allows intervention in management.

“We have been interested in the aviation industry for a long time, and we made the decision ahead of Korean Air's merger with Asiana Airlines,” a Hoban Group official said.

In 2015, the mid-sized builder failed in its attempt to take over Kumho Industrial, which was the parent of Asiana at that time after creditors rejected the bid.

Since then, Hoban Group has continued to pursue business diversification, acquiring a controlling stake in Taihan Cable & Solution in 2021 and multiple news outlets, including Seoul Shinmun and Electronic Times.

Last week, it was also reported that Hoban Construction decided to finance a consortium of STX and APC Private Equity to help their proposed acquisition of a 22.17 percent stake in Polaris Shipping from the mid-sized shipping company's second-largest shareholder.

In addition, Hoban Group participated in bids to acquire stakes in Woori Financial Group, Doosan Machine Tools and Daewoo E&C, although those attempts ended in failure.

The latest investment in Hanjin KAL is perceived as being aimed at using Korean Air and Asiana to create synergy with Hoban Group's hotels, resorts and golf courses.

There is also speculation that the group will focus on nurturing the logistics business as its new cash cow, considering its bid to acquire a stake in Polaris Shipping which signed long-term contracts with POSCO, Korea Electric Power Corp. and Hyundai Glovis, as well as Brazil's Vale, the world's largest exporter of iron ore.

However, the group's expansion plan still faces uncertainties, because its chairman is under investigation for allegedly violating antitrust regulations.

The FTC said on March 17 that it decided to file criminal charges against him for allegedly underreporting the ownership stakes held by his family members in the group's affiliates between 2017 and 2020.

If found guilty, the chairman could be sent to prison for up to two years or fined up to 200 million won ($164,000).

At that time, Hoban Group complained about the FTC's decision and told the antitrust regulator that the underreporting was due to an employee's error.