Macquarie Korea keeps current fund operator

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Macquarie Korea keeps current fund operator

Shareholders of Macquarie Korea Infrastructure Fund (MKIF), an infrastructure investment-focused fund with 3 trillion won ($2.67 billion) in capital, agreed to retain its current fund operator, rejecting a minority shareholder’s attempt to replace it.

In an extraordinary general meeting on Wednesday, 42.9 percent of shareholders of the Kospi-listed investment firm voted against a proposal to replace Macquarie Korea Asset Management with Koramco Asset Management, a Korean asset manager.

Seventy-four percent of the shareholders turned up at the meeting at the Plaza Hotel in central Seoul and 31.1 percent of them voted in favor of the proposal.

For a motion to pass, more than 50 percent of the participating shareholders must agree to it. The dispute began in June, when Platform Partners Asset Management, a local infrastructure management firm that holds 4.1 percent stake in MKIF, proposed changing the fund’s management firm or cutting management compensation fees given to Macquarie Korea Asset Management by a tenth.

A public relations official at Platform said that the high commission fees damage shareholders. The dispute was unusual because most local investors are not outspoken about their interests as in corporate governance.

Founded in 2015, Platform Partners is a mid-size infrastructure management company with assets of 500 billion won.

Proxy advisors were divided over the issue, intensifying a rift between Macquarie Group and Platform Partners. Three advisory firms, including Glass Lewis, Sustinvest and the Korea Corporate Governance Service, advised the shareholders to side with Platform, while Institutional Shareholder Service (ISS), the largest proxy advisory firm in the world, and Daishin Economic Research Institute urged them to vote against the proposal.

The three firms stated that the current fee base is excessive, adding that the board of directors at MKIF also needs to be changed.

The other two advisors said that the current fund operator is delivering healthy returns to MKIF.

“MKIF recorded an annual return on investment of 9.4 percent and a dividend yield of 7.2 percent since going public in 2006, which were far higher rates of return than that of government bonds. This is substantial evidence of creating a considerable amount of shareholder value,” the ISS said in its report.

Since institutional investors, which are considered conservative, hold a 49.7 percent stake in MKIF, analysts predicted that the local investor had a slim chance of winning over a majority of the shareholders. The head of Macquarie Korea Asset Management vowed to be more vigilant about shareholders’ interests.

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