Truston Asset looks to help run Taekwang with 5.8% stake

South Korea's Truston Asset Management has changed the purpose of its stock investment in the chemical and textile company Taekwang Industrial Co. from "general investment" to "participation in management."

Former Taekwang Group Chairman Lee Ho-jin took action as shareholders showed signs of retreat from the company's environmental, social and governance (ESG) management following his release from prison.

The asset management company on Thursday in a statement said it requested actions to raise shareholder value like the use of cashable assets, expansion of stock liquidity, setup of a rational policy on shareholder return and formulation of a regular investor relations plan but that these requests were ignored after Lee's release from prison.

"Truston, as a major shareholder owning 5.8% of Taekwang Industrial, will serve as an external watchdog on behalf of the market and minority shareholders," said a Truston source. "We plan to conduct more active shareholder activity."

Taekwang Industrial recently tried to take part in a paid-in capital increase in Heungkuk Life Insurance, the shares of which are all owned by Lee's family, but decided not to amid opposition from shareholders such as Truston. As of the third quarter of this year, Taekwang Industrial had cash and cash-equivalent assets of 625.1 billion won ($476.9 million), but its failure to share profits with stakeholders resulted in a dividend payout ratio, or the ratio of dividends to net profit, of 0.46%.

Write to Eui-Myung Park at uimyung@hankyung.com