South Korea’s Pan Ocean has become the latest shipowner to take an interest in the airline industry.
The shipowner has acquired a 5.8% stake in Hanjin Kal, the parent company of flag carrier Korea Air Lines Co, making it the fifth largest shareholder.
The shipowner paid KRW 126bn ($95.4m) for the stake, or KRW 37,715 per share, according to a regulatory filing.
The acquisition of the shares was reportedly done via a block deal, enabling Pan Ocean to purchase the stake at a 5% discount to its market price.
Pan Ocean is said to have acquired the stake from compatriot company Hoban Construction, according to media reports in South Korea.
“We do not see any synergies between Pan Ocean and Hanjin Kal following the purchase of the minority stake,” said Nomura’s Korea industrials analyst Eon Hwang.
“Pan Ocean explained that the purpose of acquiring minority stake in Hanjin Kal was to pursue capital gains from any potential rise in Hanjin Kal’s stock price.
Hwang said the market is aware of Pan Ocean and its major shareholder Harim Corp’s disappointing governance and do not expect shareholder-favorable decisions.
“In the past, Pan Ocean had attempted to acquire Easter Airline in June 2021, which, too, had no synergies with Pan Ocean, in our view,” Hwang added.
The head of South Korea investment banking at Bank of America recently told Bloomberg that he expects deal-making activity in South Korea to accelerate next year, mostly driven by private equity firms.
“The country has become a hotspot for buyout firms as they diversify their capital allocation strategy away from China,” the Seoul-based Cho said.
Pan Ocean is not the first shipowner to look to invest in the aviation sector.
In late November Mediterranean Shipping Co (MSC) reportedly told Italian authorities that it was no longer interested in investing in ITA Airways as part of a planned privatisation.
The Soren Toft-led shipowner had partnered with German airline Lufthansa earlier this year to bid for a stake in the Italian airline — the successor to Alitalia.
The world’s largest container ship owner had initially seen an investment as a way of expanding beyond its cruise and container shipping business.
In May this year, CMA CGM spent $254m on a stake in Air France-KLM in a move described by chief executive Rodolphe Saade as significantly accelerating the development of the group’s air division, CMA CGM Air Cargo.
