April 20, 2024

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[THE INVESTOR] Korean asset management firm Platform Partners Asset Management is seeking to remove Macquarie Korea Asset Management from managing the the only listed infrastructure fund in the country citing reckless management and excessive fees.

Platform said on June 27 that it has called for a shareholders meeting to decide the dismissal of the Korean unit of the Australian financial group, which has been operating the Macquarie Infrastructure Fund since 2006. Platform holds a 3.11 percent stake. 

In Macquarie’s place, Plaform is recommending state-run KORAMCO REITs Management and Trust. KORAMCO has promised to charge fees that are about one-eighth of Macquarie’s, without any performance premiums.

“We plan to remove the asset management company to recover shareholder value and normalize operations of the fund that relies on toll fees and government subsidiaries. We also want to lower the toll fees of privately-operated roads held by Macquarie,” Platform said in a statement.

If half or more of the shareholders approve, Macquarie can be voted out.

This marks the first instance of shareholder activism by a Korean company targeting an overseas firm. Until recently, foreign hedge funds such as Elliott Management have been driving the movement.

During 2006 to 2017, Macquarie Korea Asset Management took home a total of 535.3 billion won (US$478 million) as management and performance fees. Platform claims the figures are more than 30 percent higher than other infrastructure funds and excessive, hurting shareholder value. 

Incheon Bridge is Korea’s longest bridge linking Yeongjongdo and Songdo International Business District Macquarie Infrastructure Fund has a 64.05 percent stake in the bridge operator.

Of the fees, 300 billion went to Macquarie’s headquarters in Australia, according to Platform. Macquarie also signed a Minimum Revenue Guarantee with the government.

Macquarie Infrastructure Fund, established in 2002 and listed in 2006, is a holding company for 12 infrastructure project companies and has invested 1.71 trillion won so far.

“Assets held by the fund are public property, and are being operated with precious tax money. Therefore, they have to be managed correctly and efficiently not only for returns but to maximize public interest,” said Platform CEO Chung Jae-hoon. “About 80 percent of the fund’s shares are held by domestic institutional investors and pension funds, which means that the impact of reckless management of Macquarie reaches far beyond just shareholders.” 

Macquarie refuted the allegations calling them “inaccurate.”

“Our management fees are similar to that of other infrastructure funds overseas,” Macquarie said in a statement on June 26. “The current structure of management fees was decided after getting government approval in 2006 and we provide detailed and transparent disclosures.”

Domestic institutional and individual investors hold 48 percent and 30 percent in the Macquarie Infrastructure Fund, respectively, while foreign investors own 22 percent. The fund’s market value reached 3.15 trillion won on June 27.

By Park Ga-young (gypark@heraldcorp.com)