NPS raises stakes in Korean Inc., giving it more power to influence companies

2020.02.10 14:23:39 | 2020.02.10 14:24:07

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South Korea’s largest institutional investor National Pension Service (NPS) with over 700 trillion won ($586 billion) assets under management has upped stockholdings in local companies to tantamount to 7 percent of total market capitalization last year amid legal grounds for stronger exercise of voting rights.

According to the Korea Listed Companies Association on Sunday, NPS currently owns a 5 percent or higher in 313 listed companies, up 7.2 percent from the end of 2018, and 10 percent or more in 96 companies, up 22.5 percent over the same period. The institutional investor is the largest shareholder in nine companies including the country’s top steel maker Posco and internet giant Naver Corp.

NPS’ stockholdings valued at 123 trillion won as of the end of last year, or 7.1 percent of total market capitalization.

The increase in holdings in the country’s major companies comes as NPS won legal backing to exercise shareholders rights more actively. A revised capital market law took effect on Feb 1, defining public pension funds owning 5 percent or more in a listed company a general investor capable of demanding changes in the board or corporate articles to participate in management affairs. Previously, the public funds could hold shares in a company for simple investment purpose.

Last Friday, NPS changed its stated purpose of holding stake in Samsung Electronics Co., SK Hynix Inc. and Hyundai Motor Co. to “general investment”. NPS owns 10.69 percent stake in Samsung, 10.17 percent in SK, and 10.46 percent in Hyundai.

NPS will not be able to use its increased shareholders rights at the upcoming general shareholders meeting season in March as it has to set up a committee of trustees, which administers exercising shareholders rights. But the pension fund can still exercise voting rights in issues raised by other shareholders.

By Chung Seung-hwan and Cho Jeehyun

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