Hanwha Systems said Monday it purchased an additional 3.45 percent stake in KAI on the open market over the past month.
The purchases lifted Hanwha Group's combined ownership of KAI to 15.89 percent, including 9.90 percent held by Hanwha Aerospace, 4.98 percent by Hanwha Systems and 1.01 percent by Hanwha Aerospace USA.
The move comes about a month after Hanwha disclosed a 12.44 percent stake in KAI on July 8 and announced that Hanwha Systems planned to purchase up to 500 billion won ($352 million) worth of additional shares by the end of the year.
With its stake now exceeding 15 percent in the listed company, Hanwha plans to seek a merger review from the Korea Fair Trade Commission.
KAI's largest shareholder remains the state-run Export-Import Bank of Korea, which holds a 26.41 percent stake.
The rapid buildup of its stake has fueled speculation that Hanwha could eventually seek to acquire KAI if the government moves to privatize the aerospace company.
A potential combination would bring together complementary aerospace and defense capabilities.
Hanwha has expertise in aircraft engines, guided weapons, radar, satellites and land and naval defense systems, while KAI specializes in the development and integration of fighter jets, helicopters and unmanned aircraft.
The expansion of its KAI stake also comes as Hanwha seeks to build a broader aerospace and defense ecosystem as part of its ambition to become what it describes as a Korean counterpart to SpaceX.
Hanwha Group recently unveiled a long-term strategy to invest 55 trillion won through 2040 in a push to make South Korea a global leader in artificial intelligence and space technologies.
"South Korea can no longer view space and aviation as separate industries," Hanwha Group Senior Vice Chairman Kim Dong-kwan said during the unveiling of the strategy in Jinju, South Gyeongsang Province, in July. "When space and aviation, AI and defense are connected as one, the country can truly emerge as an AI and space powerhouse."
Hanwha also plans to promote the development of a southern aerospace industrial belt linking Changwon, home to Hanwha Aerospace, Sacheon, where KAI is based, and Goheung, home to the Naro Space Center.
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