A Factor to Be Reckoned with
Credit Suisse, a foreign financial institution, is drawing keen attention from Korean analysts by steadily purchasing shares of Hanjin KAL, the holding company of Hanjin Group. Some speculate that Credit Suisse may seek to exercise influence on the group's efforts to revamp its governance structure, as U.S.-based hedge fund Elliott Management did for Samsung and Hyundai Motor groups.
According to the Financial Supervisory Service's electronic public disclosure system on Oct. 1, the Credit Suisse Group reported to the Korean financial watchdog on September 27 that the company held 2,976,585 Hanjin KAL shares, which amount to 5.03% of the company’s entire shares. The group bought 2,944,790 shares (4.97%), 32,605 shares (0.06%) and 190 shares (0.00%) through its Singaporean, Swiss and U.K. subsidiaries, respectively.
The group said that it simply bought the shares and had no intention of taking part in the management of Hanjin KAL. However, some experts said the group’s shareholdings could become an important variable if Hanjin KAL shareholders begin to take an action to participate in the company's management.
Cho Yang-ho, chairman of the Hanjin Group, held a 17.84% stake in Hanjin KAL as of the end of June, while his son Cho Won-tae, president of Korean Air, held another 2.45% stake. The Hanjin Group owner family and its related persons had a 28.9-percent stake in the company. Hanjin KAL, in turn, holds a 29.96% stake in Korean Air, a 60% stake in Jin Air and a 100% stake in KAL Hotel Network. The owner family has secured a stable control of the entire group through the holding company, Hanjin KAL.
Hanjin KAL’s major shareholders excluding the owner's family are the National Pension Corporation, which owns a 10.93% stake, and the Korea Investment Trust Management, which owns a 6.36% stake.
The Fund Management Committee, the top decision making organization of the National Pension Corporation, introduced a stewardship code (guidelines for institutional investors' voting rights) in late July. If management rationalization measures taken by the Hanjin Group fail to meet the expectations of shareholders while a social consensus is formed that institutional investors and minority shareholders need to participate in the management of the group, then shareholders may take an action to take part in its management, some experts say.
"If the Hanjin Group’s reform efforts fail to meet the expectations of the shareholders, Hanjin KAL shareholders may make an attempt to take part in the management of the company as the first case of shareholder activism under the stewardship code,” said Yang Ji-hwan, a researcher at Daishin Securities. “In this case, Credit Suisse’s stake will be a factor to be reckoned with."