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South Korea business conglomerate Hanwha Group has acquired a 9.9 per cent shareholding in Austal as the group seeks to become a long-term strategic partner with Austal in developing Australia’s defence industry capability.
Hanwha has applied for Australian Foreign Investment Review Board (FIRB) approval to increase its shareholding in Austal to 19.9 per cent.
Hanwha intends to make a meaningful contribution to Austal and Australia’s defence industry by bringing its extensive manufacturing and operational experience to maximise the opportunities in front of the company.
Hanwha global defence chief executive officer and president Michael Coulter said Hanwha believes in the long-term opportunity in partnering with Austal.
“As a strategic shareholder there will be a great opportunity for us to add significant value to Austal’s business, including in global defence and shipbuilding, supporting investment in Australia’s local manufacturing industry and capacity,” Coulter said.
“Hanwha’s position as a global leader in smart shipbuilding will provide Austal access to capital, international relationships and operational and technical expertise which can accelerate the development of Austal’s business and in turn, enhance Australia’s sovereign defence capability, at a time when this capability is more important than ever.
“Hanwha’s global defence strategy prioritises growing local, sovereign presence through investment and partnerships, as exemplified by our investment in land capability in Geelong and elsewhere around the world. We believe strongly that we can replicate that success with Austal, investing in sovereign capabilities both in Australia and with its global operations.”
Hanwha has significant interests in Australia after establishing Hanwha Defence Australia in 2019 and operating a Hanwha Armoured Vehicle Centre of Excellence (H-ACE) in Geelong.
H-ACE is responsible for the production of the AS9 self-propelled howitzer and the AS10 armoured ammunition resupply vehicle on behalf of the Australian Army.
Coulter said Hanwha would engage with Austal about board representation shortly.
“Ultimately, we believe a Hanwha position on the board will allow for the future value of Austal to be maximised for all stakeholders by fully aligning interests.”
In addition to its 9.9 per cent shareholding, Hanwha has a 9.9 per cent economic interest in relation to Austal via a cash-settled total return swap arrangement. Hanwha is also party to a cash-settled equity collar transaction in relation to Austal. Subject to the terms of the agreements, this economic interest in Austal hedges Hanwha’s exposure to future movements in Austal’s share price.
