Hanwha Ocean shares plunged more than 12 percent on Tuesday as investor concerns mounted over the state-run Korea Development Bank’s plan to sell its stake in one of the world’s largest shipbuilders.

Shares of Hanwha Ocean were trading at 78,500 won ($55) as of 2:00 p.m., down 12.09 percent from the previous day’s close.

The significant price decline came after local news reported Monday that Korea Development Bank had initiated a bookbuilding process to offload approximately 4.3 percent, or 13 million shares, of its Hanwha Ocean holdings through a block deal.

As of the end of last year, KDB held a 19.5 percent stake of Hanwha Ocean shares, the second-largest stake after Hanwha Aerospace’s 23.1 percent. Based on the bookbuilding result, KDB plans to gradually sell off its stake in batches of three to five percent to multiple buyers.

The state-run policy lender originally acquired its stake in Hanwha Ocean's predecessor, Daewoo Heavy Industries, through a debt-to-equity swap in 2000, and retained its shares even after transferring management control to Hanwha Group in 2022 via a third-party capital increase.

The decision for share selloff came as Hanwha Ocean’s share price had surged more than threefold, from around 27,000 won in early November, around the time of US President Donald Trump’s election victory, to 89,000 won at the end of April, buoyed by the new administration’s policies to revitalize the country’s shipbuilding industry.

“Some interpret KDB’s decision to sell as a signal that the bank sees Hanwha Ocean’s current stock price as having peaked,” said Byun Yong-jin, an analyst at iM Securities.

The analyst said KDB’s block deal on the 19.5 percent stake could weigh on investor sentiment and put downward pressure on the stock price as it in the near term, lowering his investment rating from “buy” to “hold.”

By Park Han-na (hnpark@heraldcorp.com)