MKIF shareholders may raise fee issue

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Thu, December 1, 2022 | 18:11

Economy

MKIF shareholders may raise fee issue

Posted : 2018-09-27 18:27

Updated : 2018-09-27 18:27

By Park Hyong-ki

Macquarie Korea Asset Management will remain as the manager of an infrastructure fund it has been managing for 16 years ― the Macquarie Korea Infrastructure Fund (MKIF).

This comes as the fund's shareholders rejected a proposal by Platform Partners Asset Management to replace Macquarie with KORAMCO REITS Management & Trust, which had agreed to manage the fund at one-eighth of Macquarie's management fees.

Less than 50 percent of the fund's shareholders voted for the management replacement proposal at a Sept. 19 extraordinary meeting, leading to the issue to be dropped.

The case is now closed, with Platform conceding defeat in the fight the activist fund waged against Macquarie over the Australian company's "greedy fee intake" starting in June.

In a press statement, Platform said it will "accept the result" of the vote, but it hoped this would be the beginning for all parties to discuss ways to improve the value of the fund for its shareholders.

Macquarie said it remains committed to boosting returns for its investors, and that it will maintain "dialogue and have discussions regularly" with them.

Some stakeholders questioned the Australian company's management fees, analysts and industry sources said.

"The meeting rejected the replacement proposal, and it seems that it did not really delve into the fee issue," said a person familiar with the matter.

The rejection may have been expected, given the majority of the fund's institutional investors did not seem to favor the idea of changing their manager, despite KORAMCO's appeal that it was "experienced and highly qualified" for the job, the person noted.

KORAMCO had noted there were only two companies in the top 100 the National Pension Service (NPS), the country's biggest institutional investor, did not invest in ― Daewoo Shipbuilding & Marine Engineering and MKIF.

This clearly meant there was something wrong with regard to its management fee structure, KORAMCO said, vowing KORAMCO will run the fund transparently and seek to attract the NPS to boost its shareholders value.

"We cannot root out the possibility of its shareholders demanding a fee cut at its next meeting to improve their stock value," said Kim Dong-yang, an analyst at NH Investment & Securities.

Macquarie said in August in a press statement it would lower its fees by 8 percent from what it collected in 2017, in accordance with the Macquarie Korea Infrastructure Fund's (MKIF) enterprise value, without taking into account its net debt. This fee structure will be effective from October 2018.

But Platform then said the drop in its fees was "insignificant."

Macquarie has been managing the MKIF since the early 2000s. The MKIF has 12 infrastructure assets including the Yongin-Seoul Expressway, Seoul-Chuncheon Highway and Incheon Airport Expressway.

hyongki@koreatimes.co.kr Article List