US Capital Group raises stake in South Korea’s LS Electric

Capital Group Companies Inc. has increased its stake in LS Electric Co., a South Korean supplier to Elon Musk’s X.AI Corp., as the US asset manager enjoys profits from its investments in major firms in Asia’s fourth-largest economy.

Capital Group said on Thursday it raised its stake in LS Electric to 6.11% from the previous 5.12% in a filing with a South Korean financial regulator.

Capital Group, which manages more than $2.8 trillion in equity and fixed-income assets for investors around the world, announced on Dec. 23, 2024 that it had acquired a 5.09% stake in the company.

The Los Angeles-based investment manager was estimated to have purchased the LS Electric shares at around 150,000 won-220,000 won ($103.6-$152) apiece over a one-month period, industry sources in Seoul said. The stock closed at 217,500 won on Friday.

Capital Group reportedly is betting on the strong growth potential of LS Electric, which plays an important role in artificial intelligence infrastructure, those sources said.

LS Electric, which provides switchboard to X.AI, is discussing supply deals with US Big Tech companies such as Microsoft Corp. and Amazon.com Inc., according to the sources.

The South Korean company is in final talks with one of the major global tech names for an up to 400 billion contract to supply switchboards, the sources said.

SK HYNIX, BANKS

Capital Group has pocketed sweet returns from investments in major South Korean companies such as SK Hynix Inc., the world’s second-largest memory chipmaker.

The asset manager, which has a 5.09% stake in SK Hynix, was estimated to earn 3 trillion won to 4 trillion won from its investment in the world’s top high-bandwidth memory (HBM) chip supplier to Nvidia Corp., which dominates the global AI accelerator sector.

Capital Group started buying stocks of the world’s top AI chip supplier to Nvidia Corp. in September 2009 when SK Hynix’s shares traded around 80,000 won-90,000 won. The stock ended trade at 203,000 won on Friday.

The active fund manager was also estimated to enjoy returns of 50% from investments in the South Korean banking sector.

It aggressively bought shares in KB Financial Group, Hana Financial Group and JB Financial Group Co. in 2023.

Write to Eui-Myung Park at uimyung@hankyung.com
 
Jongwoo Cheon edited this article.