Hanwha Group's office in Jung District, central Seoul [YONHAP]

Local conglomerate Hanwha Group is increasing its stake in Korea Aerospace Industries (KAI) above 6 percent, accelerating its push to build an integrated aerospace and defense powerhouse it hopes will become Korea's answer to SpaceX.

According to a disclosure filed with the Korea Exchange on Tuesday, Hanwha Aerospace -- the group's defense contractor and aviation engine manufacturer -- acquired an additional 1,047,635 shares in KAI, lifting the conglomerate's combined stake from 5.09 percent -- or 4,964,000 shares -- to 6.17 percent, equivalent to 6,011,635 shares, an increase of 1.08 percentage points.

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The shares were reportedly purchased on the open market between May 13 and Friday through an arrangement with NH Investment Securities. Breaking down the total holdings by affiliate, Hanwha Aerospace now holds 4.58 percent, Hanwha Aerospace USA holds 1.01 percent and Hanwha Systems holds 0.58 percent.

The move follows Hanwha's announcement earlier this month that it had crossed the 5 percent ownership threshold in KAI and intended to spend a total of 500 billion won ($332.4 million) on additional share purchases by the end of the year. The purchases, if completed, would bring the group's total stake to around 8 percent.

At the time of that disclosure, Hanwha also changed its stated purpose for holding the shares from "passive investment" to "active management participation."

The strategic rationale is straightforward: Hanwha wants to combine its existing strengths in engines, electronics and launch vehicle technology with KAI's systems integration expertise to create Korea's largest fully integrated aerospace company, spanning aircraft, satellites and launch vehicles.

However, whether Hanwha can secure actual management control of KAI will ultimately depend on the government's willingness to allow it.

KAI's largest shareholder is the state-run Export-Import Bank of Korea, which holds 26.41 percent, followed by the National Pension Service, which holds 8.12 percent. This gives KAI a quasi-public character that limits private sector influence.

"Unless the government has a strong will to make it happen, it is not easy for a private company to take management control given the current structure," one defense industry official said.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.

BY KO SUK-HYUN. [[email protected]]

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