By Park Hyong-ki
Staff Reporter
The government is aiming to gain returns of 40 billion won through trading of its shareholdings in state-invested companies, including the Industrial Bank of Korea and Korea Gas Corp. next year.
The Ministry of Strategy and Finance said it will increase its returns by lending state-owned shares worth about 1 trillion won to investors.
Through such securities lending transactions, investors borrow and sell government-owned stocks before prices fall. They are able to reap gains as they repurchase the stocks at a low price before giving them back to the government.
The government is expected to gain annual returns of 4 percent on lending commissions.
The ministry said it will lend the stocks while maintaining its 51 percent voting right. For instance, of its 61.2 percent stake in Korea Gas Corp, it will only lend a 10.2 percent share of the company to investors, thus maintaining its managerial control. Since it has a 51.1 percent stake in Korea Electric Power Corp, the government can only lend a 0.1 percent stake.
Through such techniques, the National Pension Service, the manager of the country's pension funds, reaped returns of 16.5 billion won last year.
This comes as the government has only been seeing small gains by safekeeping its shareholdings.
The other management technique the ministry plans to utilize is the preemptive right of new shares.
This will allow the government to receive funds from investors to purchase new shares from companies in which it has subscription rights. After the purchase, the government will be able to reap gains by transferring the shares to investors.
phk@koreatimes.co.kr