LG shares soar as UK asset manager Silchester raises stake

LG Corp., the holding firm of South Korea’s fourth-largest conglomerate LG Group, saw its share price soar in the local market on Wednesday as a London-based investment manager increased its holdings to 5.02%.    

The stock surged 9.5% to close at 93,500 won ($70.4) on April 12, outperforming the 2.8% rise on the main bourse Kospi.

On the same day, UK asset manager Silchester International Investors LLP, which started acquiring LG stocks in 2020, announced that it bought an additional 47,000 shares on April 5.

After the announcement, LG’s minority investors flocked to buy the stocks on the expectation that the UK investment manager will accelerate the increase in the Korean firm’s shareholder value.

“Silchester International Investors does not participate in the day-to-day management of the (stock) issuer or its affiliates, nor is it permitted to do so under its internal policies,” the UK asset manager said in the statement.

“However, Silchester may wish to exercise its voting rights and/or rights as a shareholder to fulfill its mandate as an investment manager. Such rights may include, but are not limited to, requesting dividend increases. Additionally, Silchester may vote for or against any resolutions proposed by the issuer or other shareholders,” it added.

The UK investment firm became widely known in Korea as it raised its holdings in telecom giant KT Corp. from 5% in 2011 to 5.2% in 2020.

With an increase in its KT holdings, the asset manager changed its investment purpose from the realization of gains and exercising of voting rights to more active ownership, such as demanding dividend payout increases and revision on the articles of association.

Market watchers are paying attention to whether the UK investment firm will raise issues on LG’s corporate governance, including the ongoing legal dispute over wealth among the conglomerate’s family members.

LG Chairman Koo Kwang-mo was sued in February by his mother Kim Young-sik and two sisters, Koo Yeon-kyung and Koo Yeon-soo, who are seeking redistribution of inherited wealth from the late LG Group Chairman Koo Bon-moo, who died in May 2018.

Write to Jong-Kwan Park at pjk@hankyung.com

Jihyun Kim edited this article.