LG Corp. shares rise after Silchester’s stake investment

[Photo by Han Joo-hyung]

Silchester International Investors LLP, a British activist fund, has made waves in the Korean market by acquiring more than 5 percent of LG Corp. shares, a unit of one of South Korea’s largest and most diversified conglomerates.

The investment firm had been steadily buying LG Corp.’s stock over an extended period, but only recently exceeded the 5 percent threshold which triggered its disclosure obligation under the country’s law. Upon the news, LG Corp. shares jumped 9.48 percent to close at 93,500 won ($71.2) on Wednesday.

Silchester is also known to have stakes in KT Corp. and Korea Electric Power Corp. Regarding KT, where it holds a stake of more than 5 percent, the investment firm once publicly stated that it will make proposals to management to increase shareholder value.

According to a disclosure filed on Wednesday, the London-based fund now holds some 7.9 million shares of LG Corp., equivalent to a 5.02 percent stake in the company. Silchester said it spent a total of 756.35 billion won to buy the shares. While the investment firm has not disclosed the exact reasons behind its stake acquisition, it said that its intention is to exercise its shareholder rights and influence the company’s decision-making process.

Silchester said in the filing that it is an investment firm and does not engage in the day-to-day management of companies in which it invests in, but it may exercise its shareholder rights and influence decision-making processes in line with its duties as a fiduciary to its clients.

Silchester added that its shareholder rights extend beyond simply requesting dividend increases and can include taking a stance on any proposals put forward by the company or other shareholders.

In 2011, Silchester disclosed that it held a stake of over 5 percent in KT, which it maintained for over a decade. However, earlier this year, the company announced that it had increased its holdings in KT to 5.2 percent and would change its investment purpose from strategic to general.