By Kim Jae-won
The Korea Investment Corp. (KIC), the nation's sovereign fund, is considering buying a major stake in the Los Angeles Dodgers, investing about $4 billion in the California baseball club. But this is raising concerns that it might result in huge investment losses.
Rep. Kim Hyun-mee of the main opposition New Politics Alliance for Democracy (NPAD) said Monday that the KIC plans to purchase a 19 percent stake in the Dodgers from Guggenheim Partners, the largest shareholder of the Major League Baseball (MLB) team.
The KIC completed its due diligence on the Dodgers last week along with its financial advisors in the U.S. The final decision on the deal will come soon.
Rep. Kim said that the deal is dangerous because the KIC is blocked from selling its stake in the Dodgers for 10 years once it buys it.
"According to conditions of the deal, the KIC cannot sell its stake for 10 years. This is risky for the fund which is obliged to withdraw its investments when Korea suffers from a lack of foreign reserves," said Kim Jun-ho, an aide to Rep. Kim.
By law, the KIC should pull out of its investments when the nation's foreign reserves shrink more than 10 percent for two consecutive months.
Kim said that the KIC is pushing for the investments in the Dodgers to exploit the popularity of the MLB club, whose lineup includes Korean starter Ryu Hyun-jin, even though the club does not guarantee handsome profits.
Representatives of the KIC and Guggenheim were not available for comment.
The news came as the National Assembly seeks to shut down the sovereign fund and merge it with the Bank of Korea. Lawmakers from the opposition parties plan to submit a bill to revise a related law to do so, saying the KIC has spent taxpayers' money in vain.
The KIC lost about 1 trillion won after it invested $2 billion in 2008 in U.S.-based bank Merrill Lynch, which later merged into Bank of America.
Three years ago, Guggenheim purchased the Dodgers from Frank McCourt. That deal placed a value of $2 billion on the team and Dodger Stadium, and a value of $2.3 billion including the 260 acres of surrounding real estate.
The current negotiations with the Korean wealth fund do not include the real estate and SportsNet LA, the regional sports channel created by the Dodgers and Time Warner Cable in early 2013.
KIC officials were not immediately available for comment.
The Korea Investment Corp. (KIC), the nation's sovereign fund, is considering buying a major stake in the Los Angeles Dodgers, investing about $4 billion in the California baseball club. But this is raising concerns that it might result in huge investment losses.
Rep. Kim Hyun-mee of the main opposition New Politics Alliance for Democracy (NPAD) said Monday that the KIC plans to purchase a 19 percent stake in the Dodgers from Guggenheim Partners, the largest shareholder of the Major League Baseball (MLB) team.
The KIC completed its due diligence on the Dodgers last week along with its financial advisors in the U.S. The final decision on the deal will come soon.
Rep. Kim said that the deal is dangerous because the KIC is blocked from selling its stake in the Dodgers for 10 years once it buys it.
"According to conditions of the deal, the KIC cannot sell its stake for 10 years. This is risky for the fund which is obliged to withdraw its investments when Korea suffers from a lack of foreign reserves," said Kim Jun-ho, an aide to Rep. Kim.
By law, the KIC should pull out of its investments when the nation's foreign reserves shrink more than 10 percent for two consecutive months.
Kim said that the KIC is pushing for the investments in the Dodgers to exploit the popularity of the MLB club, whose lineup includes Korean starter Ryu Hyun-jin, even though the club does not guarantee handsome profits.
Representatives of the KIC and Guggenheim were not available for comment.
The news came as the National Assembly seeks to shut down the sovereign fund and merge it with the Bank of Korea. Lawmakers from the opposition parties plan to submit a bill to revise a related law to do so, saying the KIC has spent taxpayers' money in vain.
The KIC lost about 1 trillion won after it invested $2 billion in 2008 in U.S.-based bank Merrill Lynch, which later merged into Bank of America.
Three years ago, Guggenheim purchased the Dodgers from Frank McCourt. That deal placed a value of $2 billion on the team and Dodger Stadium, and a value of $2.3 billion including the 260 acres of surrounding real estate.
The current negotiations with the Korean wealth fund do not include the real estate and SportsNet LA, the regional sports channel created by the Dodgers and Time Warner Cable in early 2013.
KIC officials were not immediately available for comment.
