President Choi Hi-nam of Korea Investment Corp.(KIC) answers questions at a media briefing held at KIC on May 17.(Photo: KIC)

Korea Investment Corp. (KIC) may decide to pull out the $50 million it invested in Elliot Management, a U.S. hedge fund, on account of a conflict of interest related to the hedge fund’s lawsuit against the Korean government over its demand for Hyundai Motor Group to reform its governance.
Since 2010, KIC has been reviewing the hedge fund program to seize the replacement investment opportunities and invested $50 million in Elliot Management. The KIC investment was revealed when Elliot Management sued Samsung C and T to block its merger with Cheil Textile in 2015.
President Choi Hi-nam said he has been looking into the Elliot Management’s relations with Hyundai Motor Group, alluding to the possible withdrawal of its funds from the U.S. hedge fund.
The conflict of interest that KIC mentioned over its investment in the U.S. hedge fund has to do with the lawsuit filed by Elliot Management against the Korean government for its alleged meddling in the Samsung affair. It is asking over 700 billion won in indemnity.
KIC manages $7.5 billion provided by the Ministry of Strategy and Planning and $2.5 billion from the Bank of Korea putting KIC at odds with the U.S. hedge fund.
President Choi said he will see if KIC is in violation of a law, meaning if a law calling for any investments in any listed firms exceeding 5 percent of total shares issued should be publicly registered.
In June, 2015, the U.S. hedge fund said its investment in Samsung C &T came to 4.95 percent, but two days later increased the number to 7.12 percent. The local authorities have been investigating to see if the U.S. hedge fund’s move violated the pertinent law. He said KIC might have to go along with Elliot Management’s decision which will be up for voting by the shareholder of Hyundai Mobis on the proposed reorganization plan for Hyundai Motor Group.
A unit of U.S. activist hedge fund Elliott Management revealed on Wednesday that it holds more than $1 billion worth of shares in key affiliates of South Korea's Hyundai Motor Group and called for more rapid reform of the auto giant's governance.
The KIC CEO said his company has no choice but to follow Elliot Management’s decision as an investor in the hedge fund when it comes to the shareholders’ meetings to exercise its stakeholder rights.
It is Elliott's latest challenge to South Korea's family-run conglomerates after it forced Samsung Electronics to increase shareholder returns in 2017, and comes amid a government campaign to boost investors' power in a country where shareholder activism is rare.
Elliott Advisors called for a "more detailed roadmap" as to how Hyundai Motor Group will "improve corporate governance, optimize balance sheets, and enhance capital returns" at Hyundai Mobis, Hyundai Motor and Kia Motors. The fund did not provide a breakdown of its stakes in Hyundai's three affiliates but it’s over $1 billion worth of shares account for around 1.5 percent of the total market value of the three firms.
In the summer of 2015, Elliot Management, the activist hedge fund founded by Paul Singer, had gone to war to stop the South Korean conglomerate from going through with what Singer considered to be an unfair deal. Elliott Management, the hedge fund that Singer launched 40 years ago and still leads today, was then a large investor in Samsung’s construction division.
When the younger Lee moved to have one part of the family empire buy the construction unit for $8 billion, Elliott balked at what it considered an absurdly low price and began lobbying other shareholders to reject it. Investing farther away from its New York home than ever before, the hedge fund faced a canny opponent with enormous influence in its home country. The merger passed. Elliott sold its shares a few weeks later.