News / Pan Ocean sells Hanjin KAL shares to build war chest for HMM bid

18/10/2023

South Korean shipping group Pan Ocean has sold its 5.8% stake in Hanjin KAL, the holding company of Korean Air Lines (KAL), for $120m.

Pan’s parent, poultry processor Harim Group, is working to raise funds to acquire the flagship container line HMM.

Pan Ocean, primarily a dry bulk ship operator, bought the stake in Hanjin KAL in 2022 as a pure investment move.

The state took control of HMM after swapping debt for equity in 2016, the shares held by Korea Development Bank (KDB) and Korea Ocean Business Corp. They plan to sell 57.87% of the HMM shares as the state releases its grip on the company.

Last week, KDB refuted talk that the sale of HMM could be stalled due to a hefty price tag, estimated between KRW5 trillion ($3.5bn) and KRW10 trillion ($7.4bn). South Korean media reports that KDB and KOBC expect to select a preferred bidder next month.

Harim, which, with compatriot private equity investor JKL Partners, had acquired Pan Ocean in 2015, is teaming up with JKL again for the HMM bid. Also shortlisted is South Korea’s largest fishing company, Dongwon Group, and logistics and trading group LX International.

Pan Ocean, whose container shipping activities are confined to the intra-Asia space, is also selling several bulk carriers and chemical/products tankers to build up its war chest. Last month, it sold Grand Ace 8, a 2008-built 46,197 dwt products tanker, to India’s Great Eastern Shipping for $23.8m, following six chemical/products tankers and four bulk carriers divested so far this year, raising $132m.

Meanwhile, the South Korean government is pushing for KAL to take over its debt-laden compatriot peer, Asiana Airlines, a move that has been in the making since Covid-19 battered air travel in 2020. Yesterday, Reuters reported that KAL had offered to sell Asiana’s air freight business and divest routes to four European cities to satisfy EU antitrust authorities concerns that the KAL/Asiana union could reduce competition on routes between between Europe and South Korea.

Listen to this clip of Vespucci Maritime’s Lars Jensen talking to The Loadstar Podcast about how companies should diversify up and down container shipping supply chains.