Ruling Saenuri Party chairman Kim Moo-sung on Friday urged Korea’s National Pension Service to exercise its shareholder rights in order to protect the public’s assets from the fallout of a founding family feud at Lotte Group.
“I consider the biggest victims of founding family’s conflicts at Lotte to be not family members involved, but ordinary people who have put their retirement savings into the NPS,” Kim said in a meeting at the National Assembly.
The nation’s largest investor has a stake in most of Lotte’s eight publicly listed affiliates, including more than 5 percent of shares in four of them: Lotte Chilsung Beverage Co., Lotte Himart Co., Lotte Chemical Co. and Lotte Food.
In the second quarter, the NPS expanded its stake by up to 2.26 percentage points at each of the four affiliates, with expectations that the firms would show steady growth down the road.
Shares of Lotte affiliates plunged over the past week as a mud-slinging succession battle involving the two sons of group founder and general chairman Shin Kyuk-ho escalated.
Hit hard by the family feud, the market capitalization of Lotte affiliates fell at least 1.5 trillion won ($1.28 billion), between July 27 and Aug. 6, according to data compiled by market tracker FnGuide.
The NPS racked up 77 billion won in valuation losses from its investment in Lotte affiliates in the same period.
The pension operator suffered a loss of 32.9 billion won from its investment in Lotte Chemical over the cited period, followed by 26.37 billion won from Lotte Chilsung Beverage, 10 billion won from Lotte Himart and 7.76 billion won from Lotte Food, the data showed.
“No one knows how much more could be lost (as Lotte enters crisis mode). The NPS needs to step up as an activist investor to protect the assets of ordinary people (from the impact of Lotte’s family feud),” Kim added.
Shin Dong-bin, the second son of the 93-year-old founder, has been engaged in a bitter battle with his father and elder brother, Shin Dong-joo, for control of Lotte, whose business interests range from amusement parks and hotels to department stores in South Korea and Japan.
With no immediate end to the family feud in sight, market watchers expected shares of Lotte affiliates to be on a roller-coaster ride for the time being.
By Suk Gee-hyun and news reports (firstname.lastname@example.org)