Hanwha Group has received approval from the US Committee on Foreign Investment (CFIUS) to increase its shareholding in Australian shipbuilder Austal to 19.9 per cent from the current 9.9 per cent, the South Korean conglomerate said on Tuesday.
Austal, which supplies defence vessels to the US Navy, is seeking independent verification of this approval, according to a separate statement.
Hanwha, which currently holds a 9.9 per cent stake in Austal and holds a further 9.9 per cent economic interest through a cash-settled total return swap, said that CFIUS has also granted approval to increase its stake up to 100 per cent.
Its application with the Australian foreign regulatory authority for the share acquisition is still pending.
However, Austal said that it, "understands that the approval granted by CFIUS is different from that claimed by Hanwha" and is requesting written confirmation from CFIUS.
CFIUS did not immediately reply to Reuters' request for comment.
Shares of Austal rose as much as 7.6 per cent to A$6.21 to hit a record high before paring some gains. The benchmark index was up 0.7 per cent.
CFIUS's approval is, "consistent with the significant interest we are receiving from the US government for further transfer of our technology and practices from Korea to help uplift shipbuilding in the United States," Hanwha said in its statement.
The approval comes amid increasing defence spending by Australia and other US security allies, creating favourable conditions for companies like Austal.
Austal shares have risen about 86 per cent this year, as of last close, riding on the military spending wave.
Hanwha will provide Austal access to capital, international relationships and operational expertise that can boost the development of Austal's business, the company said.
The group is South Korea's seventh-largest conglomerate, with KRW112 trillion ($77.3 billion) in assets spanning the energy, defence and financial industries.
(Reporting by John Biju in Bengaluru; Editing by Tasim Zahid)