À̹ÌÁö È®´ë LG Chem Ltd.¡¯s battery spinoff plan has hit a hiccup as its second-largest shareholder National Pension Fund (NPS) publicly displayed its disapproval, a move that may influence other institutional investors.
Korea¡¯s largest pension fund, which holds a 10.28 percent stake in the battery maker, said on Tuesday that it will vote against LG Chem¡¯s plan to separate its battery business into a standalone company. The shareholder vote is scheduled for Friday.
NPS said its decision was based on ¡°concerns of diluting equity value,¡± echoing the same sentiment as individual investors. Retail investors flocked to the stock after LG Chem hit No. 1 in the global EV battery market in the second quarter but turned panicky when the company announced on Sept. 17 its plan to demerge its battery making unit by Dec. 1.
Apart from rechargeable batteries, LG Chem produces value-added petrochemicals, materials and bio drugs.
¡°We very much regret that NPS opposed the plan,¡± LG Chem said in a statement, adding that the scheme is backed by foreign proxy advisers including International Shareholder Services and Glass Lewis.
LG Chem shares rose 1.58 percent to close Wednesday at 642,000 won ($567).
The sudden move by Korea`s biggest institutional player came as a surprise as most domestic and foreign proxy advisory firms, including the pension fund¡¯s own proxy adviser Korea Corporate Governance Service (KCGS), approved of the plan. NPS had followed through on 90 percent of KCGS recommendations in the past.
À̹ÌÁö È®´ë Global proxy advisers generally backed the spinoff, believing it to bolster the corporate value of the separated battery business in the long term. LG Chem needs to invest 3 trillion won to 4 trillion won in its battery business every year. If the battery unit becomes an independent company, it can raise money more easily through an initial public offering or other funding scheme.
Most believe the demerger plan will likely pass as the company is expected to have enough votes in its favor.
LG Chem¡¯s largest-shareholder is the holding company LG Corp. with a 30.06 percent stake. NPS is the second-largest with 10.28 percent. Other foreign investors hold a combined 38.08 percent, with the remaining 20 percent shared by institutional and retail investors.
Unless the NPS move influences others, LG Chem would have more than 70 percent of the votes on its side.
Institutional investors including asset managers said they may refer to the pension fund¡¯s dissenting opinion but cast their votes largely based on internal policies.
By Lee Yoon-jae, Kang Bong-jin and Kim Hyo-jin
[¨Ï Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]