Stakes of South Korea’s biggest institutional investor National Pension Service (NPS) in local companies have significantly increased over the past four years following eased investment regulations.
With higher interest, it is expected to play a more active role in corporate management of these companies after it announced a plan to adopt the so-called stewardship code, a guideline that encourage institutional investors to exercise their voting rights, next year.
According to Korea-based corporate evaluation website CEO Score on Wednesday, NPS had stakes of 5 or more percent in 275 companies as of the end of September, up 23.9 percent from the end of 2013. The number of firms in which the state pension operator had 10 percent or more stake stood at 84, doubled from four years ago.
The sharp rise in its interest in the local firms was attributed to eased investment regulations, said CEO Score. NPS were originally banned from holding 10 percent or more in individual companies, but the government relaxed the restriction in September 2013 allowing NPS to increase its ownership in local companies.
By company, NPS had the largest 14.33 percent stake in LG Hausys Ltd., the country’s leading construction materials maker, and 13.58 percent stake in retail giant Shinsegae followed by Humax Co., LG International Corp., and Hotel Shilla Co. with 13.5 percent each.
It had 13 percent or more stake in a total of 18 companies. The figure goes up to 23 firms when counting those in which NPS had 12 percent or more stake. NPS was the largest stakeholder for five companies - BNK Financial Group, NCSoft Corp., Posco, KT Corp., and Naver Corp.
NPS’s stake in Samsung Electronics Co. and SK Hynix Inc., the country’s top two firms based on market capitalization, jumped from below 5 percent in end-2013 to 9.71 percent and 10.37 percent, respectively, at end-September this year. Its stake in the country’s largest automaker Hyundai Motor Co. rose by 0.55 percentage point to 8.12 percent in the citied period.
On Sunday, the country’s largest institutional investor, which is also the world third largest pension fund with nearly 600 trillion won ($548.1 billion) assets under management, announced its fund management committee decided to introduce the stewardship code in the second half of next year and be more active in exercising its voting rights.
By Han Woo-ram and Cho Jeehyun
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]