South Korean container line SM Line is again downplaying a potential takeover move for massive compatriot shipowner HMM.

SM Line said it had increased its stake in the Seoul-listed container ship and VLCC company to 5.52%, from an initial 0.49% in January.

The chunk is worth $525m and ranks SM third behind state-owned financial institutions Korea Development Bank (KDB) on 20.69% and Korea Ocean Business Corp on 19.96%.

The combined stake of those two groups could rise to more than 70% if bonds are converted into equity.

A spokesperson for SM Line told The Loadstar website the deal is a pure investment play. HMM has not commented.

The SM group has already acquired Korea Line and Korea Shipping Corp, formerly Samsun Logix.

SM Line was formed in 2016 after the group bought part of the business of the collapsed Hanjin Shipping.

KDB has indicated it wants to dispose of its HMM shares, but the government believes it would be too early to relinquish control of the group.

Last November, SM Line pulled an initial public offering (IPO) due to weak interest from institutional investors.

The company said this week it has no plans to revisit this plan.

The shipowner was hoping to raise up to $710m to expand its fleet, invest in containers and explore new business opportunities.

The midsize containership owner was offering 33.8m shares, including 16.9m new shares, at between KRW 18,000 and KRW 25,000 per share ($13.80 to $19.20).

But demand from institutional investors fell short of expectations and the company withdrew its application.