November 24, 2024

• 

[THE INVESTOR] South Korea’s state-run pension fund has suffered huge valuation losses from its investment in two Samsung Group units as the stocks have plunged after their merger which it backed, data by Chaebul.com showed Nov. 21.

The value of the National Pension Service’s stake in Samsung C&T plummeted 27.86 percent to 586.5 billion won (US$494.72 million) on Nov. 17 compared to 2.1 trillion won, the combined stock value in Cheil Industries and the former Samsung C&T that were priced based on shareholders’ purchase rights prior to their merger.

The NPS, which was the biggest investor in Samsung C&T, played a crucial role as it voted in favor of an $8 billion all-stock takeover offer from sister firm Cheil Industries. The deal was widely viewed as an attempt by the Lee family to tighten its grip on various Samsung affiliates.

Prior to the merger in July last year, the NPS held an 11.6 percent stake in Samsung C&T and a 5 percent stake in Cheil Industries. Now it holds a 5.78 percent stake in Samsung C&T.

The NPS’s backing for the merger and the valuation losses worth over 500 billion won came under spotlight as Samsung Group has been found to have involved with the so-called “Choi Soon-sil gate,” the corruption scandal involving President Park Geun-hye’s confidante.

There has been allegations that Samsung handed over donations to the dubious Mir and K-Sports foundations reportedly set up by Choi in return for business favors including consolidating Samsung heir Lee Jae-yong‘s control through the merger.

Local news outlets had reported that NPS Chairman Moon Hyung-pyo, then health and welfare minister, pressured a member of the NPS’ voting committee back the merger between the two Samsung companies. The NPS flatly denied the report.

By Park Han-na (hnpark@heraldcorp.com)