SOUTH KOREA - The National Pension Fund may help local companies fight off overseas takeover bids to avoid firms falling into foreign hands, according to a government official.
The fund could flex its muscles and buy shares in companies that are being eyed by foreign companies, according to Rhyu Si Min, the minister in charge of pensions.
As the country’s biggest institutional investor with around US$200bn under management, the fund may step in when a major Korean company is targeted by speculative capital.
It has already helped SK Corporation fend off a challenge to management, but may become more active as the government decides to protect itself from foreign interference.
South Korean lawmakers last week strengthened rules allowing the nation’s companies to defend themselves from takeovers and attempts by overseas investors to try to force changes.
Analysts believe the government is being pressured into action because of public opposition to foreign takeovers.
“This sends a wrong signal to the rest of the world,” said a financial analyst at Woori Securities who did not want to be named.
In April, the National Assembly passed a bill that allowed chaebols, major family-run companies, to invest up to 40% of their net assets into shares of affiliates, up from 25%. Lawmakers wanted to see the nation’s companies defend themselves better from takeovers and overseas investors’ attempts to force change.
“This is not helpful in terms of how the country’s corporate governance is perceived,” said Kim Sang Jo, executive director at civic group Solidarity for Economic Reform in Seoul.
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