Investment Committee Convened on December 10
Sale of Management Rights Uncertain Due to Reduction in Assets Under Management
The National Pension Service has decided to fully withdraw its investment entrusted to IGIS Asset Management. This move appears to be a response to revelations that investment information from the pension fund was provided to potential buyers during the process of selling management rights at IGIS Asset Management.
According to the financial investment industry on December 10, the National Pension Service Fund Management Headquarters convened an investment committee and confirmed its plan to withdraw all capital invested in IGIS Asset Management. IGIS Asset Management is the largest real estate asset manager in Korea, whose growth has been driven by the National Pension Service. The total amount of real estate funds managed by IGIS Asset Management is approximately 26.2 trillion won, of which 14.3 trillion won is in domestic assets. The National Pension Service has invested about 2 trillion won, and the market valuation of this stake is estimated to be between 7 trillion and 8 trillion won.
The main reason for this decision is that IGIS Asset Management allegedly provided information related to assets entrusted by the National Pension Service to potential buyers without authorization during the sale of its management rights. It has been reported that reports were delivered without prior consent to Hanwha Life Insurance, Heungkuk Life Insurance, and Hillhouse, among others. In addition, there are indications that some buyers were specifically given internal return information related to the National Pension Service. The National Pension Service views these acts of information sharing as potentially exceeding a simple breach of contract, possibly constituting a leak of national secrets.
Goldman Sachs and Morgan Stanley, which served as sale advisors, are also likely to face scrutiny over their responsibility. This is because, during mergers and acquisitions, all information is delivered through the advisors under the company’s directive.
As a result, the sale of IGIS Asset Management’s management rights has also become uncertain. Although IGIS Asset Management selected Hillhouse as the preferred bidder through the main bidding process on December 8, the withdrawal of 7 trillion to 8 trillion won in National Pension Service assets would significantly impact the company’s valuation. A reduction in assets under management (AUM) would lead to a reassessment of the company’s value, potentially resulting in renegotiation or cancellation of the deal.
The withdrawal is expected to take place through the transfer of asset management to another firm. According to internal regulations of the National Pension Service, assets can only be transferred to existing contracted asset managers. Currently, seven asset management firms, including Koramco REITs Management & Trust and Capstone Asset Management, are eligible for the transfer. The National Pension Service has already reviewed the capacity and portfolio structure of each candidate, and it is reported that there are no significant issues expected in the actual transfer of assets.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
