Hanwha Group secures $4.4 bn from KDB to finance ESG business

South Korea’s Hanwha Group has clinched a 5 trillion won ($4.4 billion) commitment from the state-run Korea Development Bank over the next five years to finance its environmental, social and governance (ESG) projects.

The defense-to-insurance conglomerate said on Wednesday the two sides also agreed to jointly launch this year a 100 billion won ESG fund with other companies to support small and medium-sized companies with promising green technology.

Hanwha said it is widening its business focus from petrochemicals and explosives to renewable energy, including solar power, hydrogen, as well as future mobility and aerospace.

“Hanwha is preparing for the coming decade as a global green energy leader by advancing the green energy business model and developing related next-generation technologies,” said Kim Dong-kwan, chief executive of Hanwha Solutions Corp.

Kim, the eldest son of Hanwha Group Chairman Kim Seung-youn, and KDB Chairman Lee Dong-gull signed agreements on the loans and the establishment of the ESG fund at Hanwha Solution’s Jincheon plant.

The partnership between Hanwha and the KDB is part of the state-run bank's cooperation programs with local enterprises to foster new growth sectors, including the low-carbon and eco-friendly energy business.

Under the deal, the KDB will extend 5 trillion won in loan with a low interest rate to Hanwha over the next five years.

The state bank first signed such a deal with LG Chem Ltd. in 2019 to promote the rechargeable battery sector. In January this year, the bank inked an agreement with SK Hynix Inc. to develop the country’s semiconductor industry.

TO STRENGTHEN SOLAR, HYDROGEN BUSINESSES

Hanwha said it will spend the money to acquire and operate eco-friendly solar and hydrogen businesses as well as to invest in green technology facilities.

Last month, Hanwha Solutions, the renewable energy unit of the group, said it is issuing green bonds worth one billion Chinese yuan ($153 million) to raise money for its solar and hydrogen energy projects.

In 2018, Hanwha Group said it plans to invest as much as 9 trillion won in solar energy projects over five years by securing funds through a rights offering and green bond issues.

According to Hanwha, its affiliates plan to issue about 700 billion won in green bonds this year.

The group said it will also strengthen its hydrogen-related business through M&As like its acquisition of Cimarron Composites LLC last December.

Write to Kyung-Min Kang at Kkm1026@hankyung.com
In-Soo Nam edited this article.