Financial chief plays down hedge fund's attack on Hyundai Motor

Lim Chang-won Reporter Posted : 2018-04-05 17:20 Updated : 2018-04-05 17:20
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SEOUL -- South Korea's top financial regulator played down a campaign by Elliott Management, a U.S. activist hedge fund, against Hyundai Motor, saying the situation is different from 2015 when the fund launched a proxy war with Samsung Electronics.

"It is not a sensitive issue," Choi Jong-ku, chairman of the Financial Services Commission (FSC), told reporters on Thursday, urging the Hyundai auto group to communicate smoothly with investors and shareholders.

In a sudden disclosure, Elliott Advisors, an arm of the hedge fund, said this week that it has become a major investor of the auto group by holding more than one billion US dollars of shares in Hyundai Motor, its parts-making affiliate Hyundai Mobis and Kia Motors.

The group vowed to streamline its governance structure under government pressure to overhaul a complicated web of cross-shareholding among group units. It 
would split the module manufacturing and after-sales parts business of Hyundai Mobis, which plays a key role in cross-shareholding, and merge it with Hyundai Glovis, a logistics unit.

Elliott praised Hyundai for taking the first step towards an "improved and more sustainable" corporate structure and called for a "more detailed" roadmap on its reform.

"I do not know how meaningful Elliott's current stake is," Choi said, adding details on the fund's stake in Hyundai would be known on April 19. Market watchers said Elliott's combined stake may stand at 1.4 percent.

"Companies need to communicate smoothly with investors and shareholders," Choi said, adding the reorganization of corporate governance should be resolved through lawful procedures between shareholders or between shareholders and management.

"I think we have learned a lot from the dispute between Samsung and Elliott," he said, referring to the fund's proxy war in 2015 to prevent the merger of Samsung C&T and Cheil Industries. Samsung narrowly won the battle to complete the merger and promised to enhance corporate governance, partly reflecting the fund's demands.