Home > Business > Industry

Hoban Group reportedly eyeing increased stakes in Hanjin KAL

Published: 13 May. 2025, 19:56 Updated: 14 May. 2025, 14:18

Hanjin Group's headquarters in Sogong-dong, Jung District, central Seoul [HANJIN GROUP]

Hoban Group is reportedly planning to purchase more shares in Hanjin KAL, the holding company of Korean Air.

A key executive at Hoban Group said Tuesday that the group "is planning to acquire additional shares of Hanjin KAL from a long-term investment perspective."

Hoban Hotel & Resort, a Hoban Group affiliate, bought 374,519 shares of Hanjin KAL on the Korea Exchange between Dec. 27 last year and April 30, according to a regulatory filing Friday. The total purchase was worth 29.4 billion won ($20.6 million).

With the acquisition, Hoban Group's stake in Hanjin KAL, which stood at 17.9 percent at the end of last year, has risen by 0.56 percentage points to 18.46 percent. The group described the purchase as a “simple investment.”

Hoban became the second-largest shareholder of Hanjin KAL in 2022 after acquiring the entire stake held by private equity firm KCGI, which had previously waged a high-profile battle for management control.

As of now, Hanjin Group Chairman Cho Won-tae and his affiliates hold a combined 30.71 percent stake in Hanjin KAL. Of that, Cho personally controls 20.13 percent, while the state-run Korea Development Bank holds 10.58 percent. Hanjin ally Delta Air Lines also owns 14.9 percent of the company.

An employee enters Hanjin KAL headquarters in Jung District, central Seoul. [NEWS1]

'We’ll act as a supervisory presence'

Despite categorizing the stake as a simple investment, Hoban Group signaled that it intends to play an active role as a key shareholder. While it has no immediate plans to participate in management, the group said it will exercise its voting rights on corporate matters and oversight of governance practices.

“We made this investment based on the future value of the company, and we will monitor whether management and decision-making are conducted properly,” the Hoban official said.

In March, Hoban Construction, another affiliate, voted against a proposed increase in the annual cap for director compensation at Hanjin KAL — from 9 billion won to 12 billion won.

“The measure appeared to be aimed at raising Chairman Walter Cho’s pay rather than rewarding executives based on performance, so we opposed it,” the Hoban official said.

Hanjin KAL’s shareholder return policy has also been cited as a factor in Hoban’s decision to increase its stake. In February, the company announced a corporate value enhancement plan that included a goal of maintaining a price-to-book ratio above 1, paying out 50 percent of adjusted net profit as dividends and achieving at least a 70 percent compliance rate with core governance indicators.

Hoban has already benefited from its investment. This year, Hanjin KAL paid 360 won per common share in dividends, and Hoban received a total payout of 4.6 billion won.

The group said it will proceed cautiously with further purchases, considering Hanjin KAL’s recent stock rally. The stock closed Tuesday at its daily upper limit, finishing at 115,900 won on the Korea Exchange.

Employees enter Hanjin KAL's headquarters in Jung District, central Seoul. [YONHAP]

Hanjin Group monitoring developments

Hanjin has not made an official comment on Hoban’s recent stock purchases, likely because the current shareholding structure poses no immediate threat to management control. However, the group said it is “closely monitoring the situation.”

The move also draws attention as Hoban is currently building business ties with LS Group. In late April, Hanjin Group and LS signed a memorandum of understanding to enhance cooperation across multiple business areas, including aerospace, to maximize shareholder value and pursue joint growth.

While officially described as a strategic alliance, some industry watchers view it as a preemptive move to strengthen their position ahead of any potential future management disputes.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY PARK YOUNG-WOO [[email protected]]