À̹ÌÁö È®´ë KIC chief executive, Choi Hee-nam
South Korea¡¯s sovereign wealth fund Korea Investment Corporation (KIC) is considering terminating an investment contract with Elliott Management amid rising concerns over conflict of interest as the U.S. activist hedge fund is seeking to wage a legal battle against the Korean government over the controversial merger of Samsung C&T and Cheil Industries in 2015.
Choi Hee-nam, chief executive of KIC, told reporters at a press conference on Thursday that the sovereign fund is ¡°closely monitoring the development of the situation" on the legal dispute between Elliott Management and the Korean government.
KIC has invested $50 million into a fund managed by Elliott Management after it introduced a hedge fund program as part of an alternative investment option in 2010. But the latest move by Elliott to seek over 700 billion won ($647.5 million) compensation from the Korean government for damages caused by the former administration¡¯s unfair involvement in the 2015 merger of Samsung C&T and Cheil Industries has raised concerns over possible conflict of interest and breach of law because the KIC also manages $75 billion worth of assets entrusted by the Ministry of Strategy and Finance.
The U.S. activist hedge fund last month sent a notice of intent to the nation¡¯s justice ministry to alert of an investor-state dispute settlement over the Samsung C&T and Cheil Industries merger. Elliot claimed that the merger, which ¡°resulted in a series of criminal prosecutions of officials of the government of Korea¡± caused ¡°loss and damage¡± to the fund and asked for compensation of ¡°not less than $670 million.¡±
Elliott held over 7 percent shares in Samsung C&T at that time and challenged Samsung to stop the merger that it claimed would only strengthen Samsung Group heir Jay Y. Lee¡¯s grip at the expense of other shareholders. The U.S. hedge fund and the Korean government have three months to resolve the issue before the fund officially files a lawsuit against the government with the International Centre for Settlement of Investment Disputes (ICSID).
Choi, meanwhile, pledged that the sovereign wealth fund will aim to raise more than $25 billion in net profit by 2020 and expand total funds under its management to $200 billion by expanding consigned assets.
He added that the sovereign wealth fund will increase its management of alternative assets from the current 14 percent of its total investment to 19 percent and draw more investment from local pension funds.
As of end of last year, KIC manages $134.1 billion worth of assets including $100 billion entrusted funds and $34.1 billion investment profit. Last year, KIC¡¯s total return on investment was 16.42 percent with an average annual return rate of 5.99 percent in the last five years.
By Han Woo-ram and Lee Eun-joo
[¨Ï Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]