U.K. fund Silchester now third largest LG shareholder

LG Corporation Chairman Koo Kwang-mo speaks at the company's conference on March 16 at LG Science Park in Gangseo District, western Seoul. [LG CORPORATION]

U.K. fund Silchester International Investors became the third largest shareholder of LG Corporation, expressing its intent to demand an increase in dividend payout and other shareholder rights.

The asset manager disclosed Wednesday a 5.02 percent stake, or 7.9 million shares, in the company, adding that the purpose of holding is to push for shareholder rights.

“Silchester International Investors would not engage in day-to-day management, nor is such an engagement allowed under internal investment terms,” it said in a disclosure.

“However, Silchester will exercise shareholder rights in a way that carries out the duty entrusted by clients,” it continued. “The rights include — but are not limited to — bolstering dividends. Silchester is entitled to vote for or against any proposal put forward by the company and other shareholders.”

LG Corporation Chairman Koo Kwang-mo holds the biggest portion at 15.95 percent, followed by the National Pension Service’s 6.83 percent.

The LG Corporation stock leapt 9.48 percent to 93,500 won ($71.36) Wednesday following the disclosure, although it retreated to 93,000 won Thursday, down 0.53 percent.

Founded in 1994 in London, Silchester was set up by British millionaire Stephen Butt and his Morgan Stanley colleagues.

The asset manager made headlines in Korea back in 2011 when it disclosed its holding of 5.01 percent of KT, Korea’s leading telecommunication company. The fund house again released a public disclosure when it added another 0.19 percent in 2020.

But it appears that the fund has since reduced its stake in KT, given that Silchester was not among the list of KT shareholders with over 5 percent stake in the latest business report released March 31.

Silchester has submitted its dividend proposals to a number of Japanese regional banks including Bank of Kyoto and Shiga Bank.

The announcement came at a tricky time as LG Corporation Chairman Koo is facing an inheritance litigation from his adoptive mother and sisters.

The family members claim that Koo, an only son adopted by the late Koo Bon-moo, former LG chairman, has no right to inherit a major portion of assets by the patriarch, while the chairman says that the inheritance ruling is a result of the settlement decided upon by the four family members.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]