DP lawmakers aim at MBK in urge for NPS to 'sever ties with speculative investors'

The National Pension Service in Seodaemun District in western Seoul [NEWS1]

 
With the National Pension Service (NPS) poised to play a de facto casting vote at the upcoming annual shareholder meeting of Korea Zinc set for March 24, a crucial stage in the ongoing management control dispute, Korean politicians are urging it to uphold its duty as a public fiduciary and safeguard both corporate and labor interests.
 
The heightened scrutiny comes as the NPS’s 5.2 percent stake in the smelter places it at the center of a management clash with the coalition of MBK Partners, a private equity firm, and the Young Poong, while MBK faces growing calls for accountability over the deteriorating management of Homeplus, one of the private equity firm's portfolio companies that is currently in the midst of corporate rehabilitation.
 
“The NPS must never forget that it is a public fiduciary safeguarding the assets of the public, not a shield for entrenched interests,” said Supreme Council member Democratic Party (DP) Rep. Hwang Myeong-seon on Monday. “Since acquiring Homeplus, MBK Partners has plundered assets with no regard for corporate growth or workers’ livelihoods, leaving lasting damage for employees, local economies and the broader real economy.”
 
“For the NPS to act with genuine principle, it must go beyond exercising shareholder voting rights and decisively sever ties with speculative capital,” Hwang said. “The NPS should reassess its relationship with predatory private equity from the ground up and serve as a guardian protecting companies and workers from the excesses of speculative investors.”
 

Korea Zinc Chairman Choi Yun-beom speaks during an interview with the Yonhap News Agency on Jan. 9. [YONHAP]

 
Hwang’s call came after President Lee Jae Myung in December of last year stressed the importance of the stewardship code, underscoring the obligation of institutional investors to act as responsible fiduciaries.
 
The central issue at the upcoming shareholder meeting is the composition of the board of directors, where the MBK-Young Poong alliance is pushing for the appointment of new directors and amendments to the company’s bylaws with a goal of gaining control of the board.
 
Korea Zinc’s current management, however, is urging the importance of continuity in its investment strategy, particularly regarding its $7 billion U.S. investment to build a smelting facility in Tennessee in collaboration with the U.S. government.
 
Currently, the MBK-Young Poong alliance is reported to hold a slight edge in the tussle, with roughly 41 percent of voting rights. However, the outcome could still hinge on the exercise of certain shares and the positions of institutional investors, with the NPS and other major funds viewed as key swing factors in determining the vote.
 
DP Rep. Kim Nam-geun also urged that the stewardship code be extended to private equity funds.
 
“Currently, the code is applied mainly to equity investments. For example, MBK Partners made predatory investments in companies such as Homeplus, and institutional investors like the NPS backed those funds. The government intends to apply the stewardship code to funds raised by private equity as well,” Kim told reporters on Thursday, following government-party consultations with the Financial Services Commission, the Financial Supervisory Service, the Ministry of Health and Welfare and the NPS aimed at promoting the activation of the stewardship code.
 
“The NPS manages roughly half of its assets internally and delegates the other half to external fund managers and in the case of delegated management, the NPS evaluates compliance with the stewardship code on its own,” Kim said. “For internally managed assets, oversight will be coordinated with the Ministry of Health and Welfare.”

BY SARAH CHEA [chea.sarah@joongang.co.kr]