A Welcome Wildcat? Austal, AUKUS and an Ownership Mud Wrestle

Who owns and controls Western Australian shipbuilder Austal matters to Australian, American, Japanese and South Korean national security.  And there’s an arm wrestle that looks like turning into a mud wrestle over that question of ownership between Korea’s Hanwha Group and a low profile U.S. private equity company, Wildcat.

Austal is the Australian Government’s chosen strategic shipbuilding partner.  Based in WA, the company has Defence order books running into next decade between the contracts to build 8 large and 18 medium ocean-going landing craft for the Australian Army (total value just over $5 billion), combined with its partnership with Japan’s Mitsubishi Heavy Industries in what looks like an at least $20 billion project to build 11 Mogami class frigates for the Navy.

This complicated picture got more tangled, though, with the breakthrough decision in 2025 by the Albanese Government to choose Japan’s Mogami frigate for the Australian Navy. That gave Tokyo a keen interest in who makes the decisions around the Austal boardroom and who inside the company sees what data, when, about Mitsubishi’s cutting edge Mogami frigate design.

Right now, Austal Limited is a publicly listed company that owns and controls both its Australian and U.S. operations.  Twiggy Forrest and South Korea’s Hanwha Group are its two major shareholders, Mr Forrest holding just over 19% of its shares, with Hanwha currently owning  just under 10% but cleared by Treasurer Jim Chalmers last December to increase its holding to just under 20%.

On top of its Austal parent company holdings, in August Hanwha made a $1.7 billion bid to buy Austal’s U.S. operations, based in Alabama.

A cashed up private equity firm, U.S.-owned Wildcat Infrastructure LLC has now leaped into this crowded picture by launching a competing $1.87 billion buy out bid for  Austal’s U.S. operations.

What might the best outcome be for Australia – and America, Japan and South Korea – out of this 4 nation muddle?  

Well, the Australian Army and Navy are relying on Austal’s Western Australian yard to build the landing craft fleets and the Australian-built part of the Mogami project.  Canberra also has an interest in Austal U.S. being successful in helping U.S. nuclear sub builders Huntingtons and Electric Boat lift U.S. sub production and help put AUKUS on a more secure path.

So, Australia’s interest is in whichever ownership structure makes program delivery smoothest.  It was a surprise that Treasurer Chalmers waved the Hanwha share buy through last year, given the complexities this almost certainly creates around the Mogami program. In a way then, a U.S. bid for Austal U.S. might have the side benefit of letting Hanwha exit stage left from Austal and look for other paths to build its Australian presence.

Tokyo has to be concerned about the industrial security and intellectual property risks involved in the Austal-Mitsubishi tie up over the Mogami program. It’s hard to not see South Korea’s Hanwha’s boardroom presence as a negative for Tokyo, given the history of political and industrial rivalry with Seoul and South Korean companies.

Washington won’t care too much about the Australian Army’s landing craft, or even the commercial issues involved in Japan’s Mitsubishi Heavy Industries working with Austal given Austal’s Hanwha presence.  But Washington does care – a lot – about the success of the shipbuilding Austal USA is doing for the U.S. Navy and Coastguard, and has enormous stakes in the security and success of Austal as a supplier of nuclear submarine modules.

Seoul will almost certainly back Hanwha’s bid to not just increase its ownership stake in parent company Austal Limited, but to take over Austal U.S. as part of the strategic push of South Korean firms into U.S. shipbuilding in recent years.  This push is both a commercial one and a highly political move given U.S. President Trump’s drive to get South Korea and other allies to invest in ‘reshoring’ of U.S. manufacturing capacity, and his Administration’s efforts to revitalise U.S. shipbuilding.

Hanwha brings technical excellence to shipbuilding, which is an obvious benefit to Australia and the U.S.. But naval programs, particularly nuclear submarine programs, are about more than just commercial and technical excellence.

No one is saying this out loud, so I will: the nuclear submarine work Austal is doing for the U.S. Navy is probably a deal breaker for the South Korean bid.  South Korea is a critical ally for America (and Australia) in our region because of its technological and military power and creativity and because of its location and history.  But getting right into the heart of the most sensitive part of U.S. undersea technology through buying into Virginian class and Columbia class module production is about a lot more than technical capacity

If Tokyo is a bit exercised by the industrial technological and security issues South Korea’s Hanwha brings to the Austal-Mitsubishi partnership, Washington — read the Pentagon — will be obsessed with whether or not now is the right time to bring a South Korean firm into the middle of America’s supply chain for its critical ballistic missile and attack class nuclear submarines.  It’s one thing to have Donald Trump agree to South Korea building its own nuclear submarines (as he did late last year), but an entirely different thing to think about South Korea as a key supplier for U.S. subs.

Summing this up, I’d expect the U.S. Navy and the Pentagon to be very encouraging around Hanwha playing a growing role in U.S. shipbuilding, but not even lukewarm about this starting with America’s nuclear submarines.  And Canberra will get that memo at some point too.

That sounds all very neat, if a bit politically difficult given Hanwa’s Austral U.S. bid, but the flip side of the Wildcat bid needs thinking through too.

Wildcat is a family-run firm, headed up by Eric Nicolaides.  It makes long term investments in companies, instead of doing asset stripping that private equity got famous for.  Public details on the firm are slim, however it’s focused on energy and infrastructure investments to date, so defence shipbuilding is a new business area for the company. 

Being a U.S. firm will make security issues around Austal USA’s nuclear submarine program simpler but not remove the need for a thorough security check into the company and its people.  If that all checks out and it’s clear that Wildcat has the financial heft and long term intent to make Austal USA succeed and grow, then a green flag to their bid from the Pentagon could end the mud wrestle.

Right now, though, there’s more confusion than clarity around Austal’s ownership and operations.  The bids have been good for the share price, but the outcome of this ownership tussle matters to 4 nations and 4 navies.  Maybe the Pentagon will bring the clarity that Canberra hasn’t to Austal – and AUKUS.

Michael Shoebridge is founder and director of Strategic Analysis Australia. From 2018 until September 2022, he was the Director of the Defence, Strategy and National Security Program at the Australian Strategic Policy Institute (ASPI) in Canberra.