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Petroleum industry

Sovereign Asset Management's Bid to Oust SK Corp. Board Faces Opposition from Domestic Institutional Investors

Strategic Insights

— 2 min read

Sovereign Asset Management, a Monaco-based private investment fund, is facing opposition from most domestic institutional investors in its bid to oust the board of SK Corp., South Korea's largest oil refiner. Ahead of the annual shareholders meeting on Friday, 34 out of 36 domestic asset management companies, mutual funds, and banks have expressed opposition to Sovereign-picked independent directors. The total voting rights of those institutions amount to 7.55% of SK Corp. Only Schroders Korea Ltd. and KorAm Bank have agreed with Sovereign's position, while the National Pension Corp. has not specified its stance. This opposition comes as Sovereign aims to upgrade corporate governance at SK Corp., while the company's management, controlled by SK Group owner Chey, has been at odds with Sovereign since providing a bailout package to its trading arm.

Key Takeaways:

  • 34 out of 36 domestic asset management companies, mutual funds, and banks have expressed opposition to Sovereign's position, holding 7.55% of SK Corp.'s total voting rights.
  • Schroders Korea Ltd. holds 0.02% stake and agreed with Sovereign's proposal.
  • KorAm Bank holds 0.004% stake and stayed neutral in the voting.
  • The National Pension Corp., an important institutional investor in South Korea, holds 3.6% of SK Corp. but has not specified its position.
  • SK Corp.'s chairman Chey Tae-won has secured support equivalent to a 35% share of the company.
  • International fund, the oil refiner's second-largest shareholder, has secured 25% support, including friendly forces.
  • Merrill Lynch in Korea reported that SK Corp.'s management was ahead of Sovereign 52% to 48% as of Sunday.
  • SK Corp's management has been at odds with Sovereign since the oil refiner provided a bailout package to its trading arm, SK Networks, despite strong opposition from Sovereign.
  • Sovereign bought a 14.99% stake in the oil refiner last April to influence its direction.

Statistics:

  • 34 domestic institutional investors opposed Sovereign's position.
  • 7.55% of SK Corp.'s total voting rights are held by institutions opposing Sovereign.
  • 0.02% stake is held by Schroders Korea Ltd., which agreed with Sovereign's proposal.
  • 0.004% stake is held by KorAm Bank, which stayed neutral in the voting.
  • 3.6% of SK Corp. is held by the National Pension Corp.
  • 35% share of the company has been secured by SK Corp's chairman Chey Tae-won.
  • 25% support has been secured by the international fund, including friendly forces.

Sources:

  • Korea Stock Exchange (KSE) Monday
  • Yonhap
  • Merrill Lynch in Korea

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