Defending Defense Industry
The government has decided not to sell shares of Korea Aerospace Industries (KAI), the largest shareholder of which is Korea Development Bank (KDB).
A senior official from the financial authorities said on Nov. 16, “Since KAI is a defense company that produces fighter jets, the government should maintain its position as the largest shareholder through KDB. So, we have concluded that we should keep the management rights.”
He added, “As KAI has high share prices and good performance, there is a high possibility of sale. Considering the distinct characteristics to push ahead with the Korean KF-X next-generation fighter project, however, it is different from a regular defense company.”
Under the “Big Deal” of the Kim Dae-jung administration, KAI was founded in 1999 by a joint venture of aerospace manufacturers – Daewoo Heavy Industries, Samsung Aerospace, and Hyundai Space and Aircraft Company. The company has been developing most domestic military aircraft, including the T-50 Golden Eagle, the nation’s first supersonic advanced jet trainer.
KDB is the largest shareholder, which has a 26.75 percent stake in KAI. Hanwha Techwin and Hyundai Motor have a 10 percent stake in the company, respectively, while DIP Holdings, a special-purpose company of the Doosan Group, has a 5 percent stake. The financial authorities previously considered KAI the most leading candidate for sale, and were planning to sell the KDB’s shares in three years. However, the government excluded them from the sales list after discussions with the Ministry of National Defense. It will not butt in on private stockholders selling their shares, though.