This article was displayed on the ChosunBiz MoneyMove (MM) site at 6:16 p.m. on Jun. 11, 2026.
With Hong Kong-based private equity fund Anchor Equity Partners (Anchor PE) reportedly entering the race to acquire aerospace parts maker Yulgok, attention is focusing on whether foreign capital could enter Korea's defense industry ecosystem. Yulgok is not legally classified as a defense contractor, but it is a partner that supplies aerospace parts to Korea Aerospace Industries (KAI). Given the domestic sentiment that is wary of foreign capital entering the defense value chain, some analysts say there are likely to be significant hurdles before any actual acquisition.
According to the investment banking (IB) industry on the 11th, the main bid for the Yulgok acquisition on the 29th included STIC Investments, Anchor PE, KCGI, and VIG Partners. Among them, Anchor PE is the only foreign manager with a base in Hong Kong.
The industry is paying attention to the fact that Yulgok is a partner supplying airframe and engine parts to Korea Aerospace Industries (KAI). Because it sits within the so-called "K-defense" value chain, if Anchor PE is selected as the preferred bidder, there could be controversy over its eligibility as a controlling shareholder.
There was similar controversy during the sale of Kumho Tire in 2017. Because Kumho Tire produced military-related products such as fighter jet tires, some argued that a sale to a Chinese company was inappropriate from a national security standpoint. Considering that defense sales accounted for less than 0.3% of Kumho Tire's total sales at the time, emotional resistance to foreign capital acquiring defense-related corporations amplified the controversy more than the actual business weight did.
Some also say the fact that Anchor PE is a Hong Kong-based manager could be a problem. A legal industry source said, "Yulgok also supplies Boeing, a U.S. defense contractor, so if the controlling shareholder changes to Anchor PE, the U.S. side could raise issues in the future."
However, industry officials say there are no legal obstacles even if Anchor PE acquires Yulgok because Yulgok is not designated as a defense contractor. Article 35 of the Defense Acquisition Program Act stipulates that "those who wish to produce defense materials must meet facility standards and security requirements and be designated as defense contractors by the Minister of Trade and Industry (MOTI)," and "defense materials" generally include firearms, guided weapons, aircraft, vessels, ammunition, and tanks. Since Yulgok does not fall under these, it is not obligated to obtain approval from the Defense Acquisition Program Administration and the Ministry of Trade, Industry and Resources when undertaking a control-rights M&A.
An IB industry official said, "There has long been a strong perception domestically that it is hard to allow corporations within the core national defense value chain to be acquired by foreign private equity," adding, "For Anchor PE, which is trying to acquire Yulgok, the key will be how to overcome emotional resistance rather than the legal aspects."