By Kim Yoo-chul
Korea Investment Corp. (KIC), the country’s sovereign-wealth fund, said it will withdraw investment in Elliott Associates if the fund acts in such a way as to hurt the national interest.
“If Elliott acts only for short-term investment gains and hurts the national interest, KIC will consider pulling its investment from the hedge fund,” a KIC executive said, Thursday.
He said KIC, which has about $85 billion in assets, has invested in the hedge fund since 2010. KIC has invested $2.6 billion in 20 different hedge funds, KIC said.
It has so far invested about $50 million in the U.S. hedge fund with the profit margin reaching 40 percent.
“KIC’s decision on Elliott is not related to its ongoing dispute with Samsung affiliates. If Elliott pushes Samsung only for short-term gains rather than boosting shareholders’ value by improving corporate governance, then this will be against the countryinterests and KIC will pull its investment from Elliott,” said the official.
KIC was established in 2005 to manage Korea’s growing wealth, initially confined to fixed-income and equity investments outside Korea.
Meanwhile, the Board of Audit and Inspection of Korea said it started investigating the KIC late last month after a request by the National Assembly Financial Committee.
“The probe will continue until July 21,” said an official at the government agency.
Samsung C&T spokesman said it will provide background documents and details to the government agency if necessary.
A shareholder meeting on whether to pass the merger plan will take place on July 17.
Elliott said the 1:0.35 swap ratio between Cheil Industries and Samsung C&T seriously undervalued Samsung C&T shares.
Samsung said it can’t accept Elliott’s request to revise up the ratio to favor Samsung C&T shareholders because the ratio was set according to local financial regulations.
The merger plan needs two-thirds approval. Samsung has 19.78 percent on its side, including 5.96 percent from local construction firm KCC while Elliott Associates holds 7.12 percent in Samsung C&T.
A Seoul court refused Elliott’s requests to nullify Samsung C&T’s decision to sell all of its treasury shares to KCC. Elliott’s separate request to ban the July 17 shareholders’ meeting was also blocked.
But two U.S.-based proxy advisory firms — ISS and Glass Lewis — which have huge influence on foreign investors for M&A-related issues — urged investors to vote against the proposed takeover.
“As the proxy fight intensifies, Samsung is making all-out efforts to persuade the National Pension Service (NPS), the biggest shareholder in Samsung C&T, and other foreign investors to vote for the merger. Also, Samsung C&T officials have visited the households of retail investors to urge them to support the deal,” said one Samsung official.
Retail investors hold 24.43 percent in Samsung C&T, while foreign investors hold 33.53 percent, including the 7.2 percent portion owned by Elliott.