The state-run Korea Development Bank may postpone its plan to sell shares of Korea Aerospace Industries to fend off the fast-growing stakes of foreign investors in the government-controlled firm, according to market reports Wednesday.

The percentage of KAI shares owned by foreign investors jumped to 22.8 percent this week, an increase of more than 7 percentage points from 15.2 percent in January.

Foreign investors seems to have acquired the KAI shares through a series of block trades offered by Korean firms in recent months.

In January, Hanwha Techwin, the defense arm of Hanwha Group, dumped 4 percent of shares in block trade, followed by a Doosan Group affiliate DIP Holdings that sold 4.99 percent, or 4.9 million shares. On Monday, Hyundai Motor also offered half of its 10 percent stake in KAI. More than 90 percent, or 4.4 million shares, were purchased by separate groups of foreign institutional investors, according to sources.

Market analysts raised concerns that such moves could delay KDB’s sales plan as the government fears of losing its control on the nation’s sole aircraft manufacturer to foreign investors.

Last November, KDB said it would sell off all its stakes in firms by 2019. The state-controlled bank, KAI’s largest shareholder, currently holds 26.8 percent stake in KAI.

The sales of KAI shares can be deferred until it sees a strategic Korean investor that has a plan to acquire the defense firm. Otherwise the state-controlled bank could choose to split its shares and sell them to separate buyers, or to put the sales plan on hold, they said.

Korean law does not have a ceiling on stakes of foreign investors in defense firms, although they are barred from becoming majority shareholders. Any investors seeking to own more than 10 percent stake in KAI should also get approval from the Defense Ministry.

A KDB official agreed that the timing of putting its KAI shares on sale could be delayed. However, such a decision will be made after comprehensive discussions not necessarily because of the growing foreign ownership or Korean firms dumping their shares in block trades.

“It is not a matter for Financial Services Commission to decide alone. There should be a comprehensive discussion by related ministries whether it is right to sell the defense firm in which the government has already invested trillions of won for the KF-X project,” a KDB official told The Korea Herald.

“We also don’t plan to split shares for sale,” he said.

Other analysts have suggested that the complete privatization of KAI will be delayed longer than expected as not many Korean firms have shown interest in the defense firm.

Hanwha’s unexpected share sales in January fazed many, as the defense affiliate of the nation’s 10th-largest conglomerate was reported to be gearing up to acquire KAI.

“Except for Hanwha, it is difficult to find a large defense company that would seek synergy effect with KAI’s aerospace businesses,” said Lee Ji-yoon, an analyst at Daishin Securities.

A KAI official remained positive that the fast-growing foreign ownership wholly reflects their interest in the defense company and its future value. KAI believes that it could generate about 38 trillion won ($32.75 billion) worth of revenue if it wins the U.S. Air Force’s trainer program, codenamed “T-X.” The program is expected to begin in 2017.

“The timing is not right for KDB to offload its shares in the market for now,” the official said.

“The company wants to keep its management stable to focus on its global business,” she said.

By Cho Chung-un (christory@heraldcorp.com)