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| The headquarters of Osstem Implant located in western Seoul / Newsis |
By Anna J. Park
The Korea Corporate Governance Improvement (KCGI) has decided to sell its 6.92 percent stake in Osstem Implant during a tender offer launched late last month by a consortium made up of Unison Capital Korea and MBK Partners, according to the activist fund. The tender offer is scheduled to last through Feb. 24.
KCGI said Friday that the decision to accept the tender offer is to respect a good faith principle for its fund investors. It means that under the principle, the activist fund company needs to perform actions that guarantee the best interests of its investors. As the private equity giants' consortium decided to pay 190,000 won ($150) per share during the tender offer, the activist fund company could reap an internal rate of return (IRR) of over 150 percent, if it responds to the offer.
The fund company worried that if it does not respond to the tender offer, the stocks held by the investment company might face a lower price than the tender offer price per share, during the remaining procedure of a possible delisting of the dental company from the KOSPI market, once the tender offer is closed.
The consortium of the two private equity companies plan to delist Osstem Implant from the main benchmark KOSPI, if it succeeds in gathering enough stakes during the tender offer. As this scenario would be violating the fund company's good faith principle owed to investors, the company reached the conclusion to sell its stake during the tender offer.
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| KCGI CEO Kang Sung-boo speaks during a press conference held at Glad Hotel on Yeouido, Seoul on Feb. 20, 2020. Newsis |
The independent asset management company raised criticisms about the current capital market's legal framework.
"A social discussion is needed to reform local capital market's current legal system that allows a major shareholder a premium stemmed from monopolizing management rights and that allows expulsion of minor shareholders from a company," the statement reads, adding that global stock markets of advanced countries have legal systems that guarantee the protection of minor shareholders.
Prior to the consortium of Unison Capital Korea and MBK Partners purchased the 9.61 percent stake of Osstem Implant from its founder and Chairman Choi Gyu-ok in mid-January, KCGI was the dental implant company's third largest shareholder. While holding a significant stake, the activist fund had been urging the company to reform the company's corporate governance, asking for the resignation of Chairman Choi and granting independence to its board.
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