Thursday, July 18, 2019
Macquarie Korea Infrastructure Fund to Vote on Changing Project Manager
Local Activist Investor’s Request Accepted
Macquarie Korea Infrastructure Fund to Vote on Changing Project Manager
  • By Jung Suk-yee
  • August 14, 2018, 14:40
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Platform Partners, a domestic activist investor, called for the board of Macquarie Korea Infrastructure Fund (MKIF) to make public a third-party report on the appropriateness of MKIF’s management fee.
Platform Partners, a domestic activist investor, has called on the board of Macquarie Korea Infrastructure Fund (MKIF) to make public a third-party report on the appropriateness of MKIF’s management fees paid to Macquarie Korea Asset Management, the fund's project manager.

Macquarie Korea Infrastructure Fund (MKIF) will put the issue of replacing its project manager to a vote at a shareholders' meeting.
 

Earlier, Macquarie Korea Asset Management (MKAM), the fund's project manager, proposed an 8% cut in total base fees it receives from MKIF. The fund's board accepted the proposal.

However, Platform Partners Asset Management claims that it is far from its initial demand for a 90% cut.

“The fee adjustment proposed by MKAM significantly falls short of shareholders’ expectations,” Platform Partners said on August 13, adding, “The fees paid to MKAM is approximately 10 times those of similar funds so an 8% cut is insufficient.”

Two months ago, Platform Partners demanded that the board of MKIF change project manager from MKAM to  Koramco Asset Management, claiming that MKAM did harm to the shareholder value with excessive fees and careless management.

Platform Partners called for the board of MKIF to make public a third-party report on the appropriateness of MKIF’s management fees paid to MKAM. Platform Partners is going to share it with shareholders after an objective examination.

According to MKAM’s proposal to the board of MKIF, the base fee can be reduced by net borrowing exclusion and the reduction can reach three billion won, about 8% of the total base fee, as of last year. The decrement rises to up to 15% based on MKIF’s borrowing limit, 540 billion won. So far, Macquarie Asset Management’s base fee has been 1.1% to 1.25% of the sum of market cap and net borrowings. Base fee adjustment is effective from October 1.

In addition, the reference return is changed to the higher one of 8% a year and the previous year’s inflation plus 6% so that the likelihood of incentives is lowered. Previously, it was 8% a year on an accumulated quarterly return basis.