Dongwon Industries, which faced setbacks in its bid to acquire HMM three years ago, is quietly preparing for another attempt. Although there has been no public declaration of intent to acquire, the company established a task force (TF) for the HMM acquisition earlier this year and has recently been hiring several former officials from the Ministry of Oceans and Fisheries.
However, skepticism persists within the shipping industry. Concerns have been raised about Dongwon's ability to manage the financial burden of the acquisition and future investments, given its roots in the fishing industry and lack of operational experience in shipping.
According to industry sources on the 25th, Dongwon Industries has been strengthening its human resources in the shipping and logistics sectors by hiring several former Ministry of Oceans and Fisheries officials. On the 24th, the company appointed a former planning and finance officer from the ministry as the head of its business planning division, following the appointment of former Minister of Oceans and Fisheries Kim Young-chun as an outside director in March.
Kim Young-chun, who served as the first Minister of Oceans and Fisheries under the Moon Jae-in administration in 2017, oversaw the 'Five-Year Plan for Revitalizing Shipping' and has consistently emphasized the need for HMM's privatization.
HMM is currently over 70% owned by the Korea Development Bank and the Korea Maritime Promotion Corporation, making the government's policy direction and sale method key variables in the privatization process. Dongwon's strategy appears to be aimed at enhancing its policy responsiveness by proactively hiring former ministry officials.
In fact, Dongwon Industries reportedly formed a task force last year to consider resuming the sale of HMM. The TF is said to be reviewing the feasibility of acquiring HMM and exploring funding options.
However, Dongwon has drawn a line connecting the hiring of former ministry officials to the HMM acquisition. The new head of business planning is part of Dongwon's marine and fisheries division, separate from its logistics subsidiaries.
The acquisition of HMM is a long-held ambition of Dongwon Group Honorary Chairman Kim Jae-cheol. The company has consistently sought to enter the shipping industry, having previously participated in the bidding for Daehan Shipping. By acquiring HMM, Dongwon aims to integrate shipping into its existing fisheries, food, packaging, and logistics businesses, aspiring to become a global comprehensive logistics company.
Industry observers remain skeptical. They argue that Dongwon lacks both the experience and financial resources necessary to successfully acquire HMM. To purchase all of HMM's shares held by the Korea Development Bank and the Korea Maritime Promotion Corporation, over 10 trillion won would be required.
As of the end of the first half of this year, Dongwon Industries reported cash and cash equivalents of only about 443.4 billion won, indicating limitations in self-funding the acquisition. Even if external funding, such as private equity funds, is utilized, the financial burden on HMM could increase during the subsequent investment recovery process.
Moreover, Dongwon's lack of experience in the shipping industry is a significant concern. While the company has a foundation in the fishing industry and experience in operating deep-sea fishing vessels, this is markedly different from the global container shipping business.
Industry voices suggest that the new owner of HMM must not only secure the necessary acquisition funds but also possess a deep understanding of the shipping industry and the capability for long-term investment. Koo Kyo-hoon, president of the Korea International Logistics Association, stated, "If acquisition funds are raised through private equity or capital increases while lacking self-funding, the financial burden will inevitably grow. The acquiring company must secure at least 60% of the minimum acquisition amount in its own funds and present a concrete investment plan to grow into a global comprehensive logistics company after the acquisition."
* This article has been translated by AI.
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