Asiana’s would-be new owner, Hyundai Development Company is a real estate developer which has been seeking business expansion and diversification in recent years from leisure to retail.

Founded as a builder for residential projects in 1976, HDC is part of the pan-Hyundai empire, sharing the family roots that thrived due to former Hyundai Group founder late Chung Ju-yung. 

The current Chairman Chung Mong-gyu is the son of late Honorary Chairman Chung Se-yung, younger brother to the group’s founder. Se-yung, also known as Pony Chung for his contribution in introducing South Korea’s first mass-produced vehicle, led Hyundai Motor for 18 years but passed the baton to his nephew Chung Mong-koo, chairman of Hyundai Motor Group, 20 years ago. 

The two companies are entirely separate business-wise. HDC also left Hyundai Group in 1999, with a focus on construction of apartments, plants and high-rise buildings. 

Mong-gyu, who began his career at Hyundai Motor also moved out of the automaker with his father, joining HDC instead. He has been HDC’s chairman since 2005.

In 2001, HDC launched I-Park, a signature brand for luxury apartments and commercial buildings, and entered the hotel business by opening Park Hyatt, a five-star hotel, in 2005. 

Ten years later, the builder entered the retail market by launching a joint venture with Hotel Shilla for a state-authorized license for duty-free operation. 

It went through a major organization restructuring by setting up a holding company HDC last year and separating the construction unit from hotel and leisure businesses. As of May, it was the 33rd-largest conglomerate by market capitalization of 10.6 trillion won ($9.1 billion), but is expected to climb up 16 notches after acquiring Asiana Airlines that holds 11 trillion worth of assets.

Of the 6.5 trillion won of sales generated by HDC affiliates last year, 4.3 trillion won came from its construction business. Asiana and its affiliates generate around 7 trillion won, bigger than sales figure by all of HDC units. 

With Kumho Asiana picking HDC and its financial partner Mirae Asset Daewoo as preferred bidder for the sale of the nation’s second-largest air carrier, HDC is expected to generate synergies with its existing businesses, and perhaps expand its global operations overseas, according to market observers.

“It is not just the aviation industry, but the entire travel industry is also excited by the news of HDC-Mirae Asset consortium becoming selected as preferred bidder for the sale of Asiana,” said Lee Hee-eun, senior researcher at Euromonitor International Korea.

“HDC will become the second-largest company in aviation industry instantly by purchasing Asiana and its low-cost carriers, enabling it to expand its business with a relatively advantageous position.

Business support from other pan-Hyundai companies is a possible, as it is the first case of a Hyundai company joining the aviation services industry, according to observers.

Other Hyundai companies, including Hyundai Motor, Hyundai Heavy Industries and Hyundai Department Store have demand for logistics services, but none of them have an air carrier under their roof. 

The share price of HDC rose 2.13 percent to 31,100 won at Tuesday’s closing.

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