Korea's SM Group Continues its Rapid Expansion

Courtesy Korea Line

By MarEx 2017-04-07 21:18:34

Samra Midas (SM) Group, the Korean construction conglomerate and vessel operator, is moving quickly to expand its fleet through a series of acquisitions. Over the past four years, SM has purchased bulker operators Korea Line and Samsun Logix, maritime trading firm STX Corporation, the trans-Pacific business operations of Hanjin Shipping and five of Hanjin's largest vessels – all through bankruptcy proceedings.

SM Group Chairman Woo Oh-heun recently told Yonhap that SM will "regain the fame held by Hanjin Shipping" by taking over shipping firms and expanding into overseas markets. The group's new "SM Line" has recently launched an intra-Asia container service, and its first trans-Pacific service will sail on April 21. An Alphaliner executive recently suggested that SM Line is expected to compete aggressively on price, potentially affecting other carriers' rates on the same routes. SM Line may also join with Hyundai Merchant Marine and with feeder lines Sinokor Merchant Marine and Heung-a Shipping to create a small-scale vessel-sharing alliance. 

Recent reports in Korean media suggest that SM's recent round of acquisitions is not yet over: it also intends to assemble a majority stake in Korea Ship Finance, a provider of financing structures for Korean shipbuilders and shipowners, including the now-defunct Hanjin Shipping. Financially challenged shipbuilder DSME holds 35 percent of KSF, and bankrupt STX Offshore & Shipbuilding holds 27 percent; both yards are in a position to sell their stakes, and an SM Group official told Asiasis that it intends to acquire shares held by Korea Development Bank as well. The official said that Korea Ship Finance would help SM Group expand its total fleet to a target size of more than 150 vessels within five years.