[Edaily Marketin JI YEONG-EUI Reporter] The fallout is growing after the National Pension Service’s attempt to switch the general partner (GP) for “Yeoksam Centerfield,” a prime office building in Seoul’s Gangnam district, from Aegis Asset Management to Koramco Asset Management ultimately fell through.

There is widespread speculation in the market regarding why the National Pension Service pushed so hard to replace Centerfield’s manager despite a lack of solid legal and economic grounds. Despite an unusually forceful push—including the replacement of the working-level manager within the Fund Management Division who had advocated for caution regarding the asset transfer—the NPS has ultimately been left with nothing but a result that lacked both justification and tangible benefits.

According to the investment banking (IB) industry on the 9th, the National Pension Service recently convened its Alternative Investment Committee to review proposals to replace Centerfield’s general partner (GP) and extend the fund’s maturity, but ultimately rejected them. Initially, the Real Estate Investment Division of the Fund Management Headquarters, led by senior officials within the division, had pushed for the GP replacement and attempted to force through the transfer by selecting Koramco Asset Management as the preferred bidder last April; however, it appears the plan was derailed by the final decision-making body.

It is reported that AIC members questioned the legal and economic appropriateness of a structure that would settle large-scale performance fees and equity returns with the existing manager before the actual sale of the assets had taken place. To replace the manager mid-term, the fund would have to settle a total of approximately 100 billion won—including performance fees (about 75 billion won) and equity returns (about 20 billion won)—based on the current appraised value of the assets. The committee effectively determined that the settlement method—which involves paying substantial fund expenses for assets that have not yet been liquidated (exited)—lacks a sufficient legal basis.

The Large-Scale Investment Committee is composed of seven members: the Chief Investment Officer (CIO) as chair, three internal members (excluding the head of the department responsible for the matter—the Head of the Real Estate Investment Division), and three external experts. This structure makes it difficult for the Real Estate Investment Division to push through a proposal based solely on its own judgment. Ultimately, the National Pension Service ended up reversing its own decision at the last minute, even after pressuring the existing general partner (GP) and identifying a candidate for a new GP.

Centerfield is a mega-scale office complex in which the National Pension Service invested in 2018, appointing Aegis Asset Management as the GP. The investment amounted to approximately 2.1 trillion won, and its current market value is estimated to be as high as 4 trillion won. The ownership structure consists of the National Pension Service and Shinsegae Property each holding around 49.7%, with Aegis holding approximately 0.5%.

Market attention is focused on the National Pension Service’s internal decision-making system. If the matter was rejected at the Grand Investment Committee stage due to “insufficient legal grounds,” this serves as clear evidence that the preliminary review at the working level was inadequate from the outset. Questions continue to mount regarding why the National Pension Service pushed so aggressively to replace the GP.

In particular, many point out that this incident is the result of a combination of unilateral decision-making by high-ranking officials in the Real Estate Investment Division and the neutralization of the National Pension Service’s internal checks and balances. The aspect of the rejection that is fueling market skepticism is directly linked to the personnel controversy that arose when the Real Estate Investment Division pushed through the GP replacement.

Last December, the Real Estate Investment Division carried out a “one-off personnel change”—suddenly replacing the head of domestic real estate investment operations (Team A Leader)—even though it was not a regular personnel rotation period. This individual was reportedly advocating for a cautious approach, citing low tangible benefits for the National Pension Service, such as risks and cost burdens associated with asset transfers.

In particular, the fact that the new head of operations—who has stepped into the spotlight as the successor—has a background at a specific major conglomerate (a Samsung affiliate), just like the current Chief Investment Officer (CIO) and the head of the Real Estate Investment Division, has been widely discussed, leading to controversy over whether the independence of the Fund Headquarters’ internal governance has been compromised. Amid assessments that the internal checks-and-balances system was failing to function properly, rumors circulating both inside and outside the market regarding the transfer of assets to a specific asset management firm appeared to be materializing; however, the move was ultimately halted at the final hurdle—the Grand Investment Committee.

An investment banking industry source noted, “At the time, a list of multiple asset management firms, including Koramco Asset Trust, was mentioned as candidates for the asset transfer, and there were even repeated media reports that were certain the change would happen.” The source added, “Since Koramco Asset Management was actually selected as the preferred bidder during the Centerfield GP replacement process, it has sparked further discussion that the speculation at the end of last year was not merely a rumor.”

Another senior official at an institutional investor (LP) said, “If this was an issue where the conclusion that it was legally difficult only emerged at the final stage, it raises questions about whether sufficient legal and economic feasibility reviews were conducted before Koramco Asset Management was selected as the preferred bidder.” The official added, “It seems difficult to avoid criticism that the National Pension Service’s decision-making was skewed toward an emotional battle—excluding a specific asset manager and securing control—rather than its original purpose of enhancing asset value.”

The official added, “It is considered quite unusual and unexpected that the strong personal biases and emotions of the working-level staff were so clearly evident in a National Pension Service alternative investment deal.”

In response, the National Pension Service explained, “All investment cases are reviewed based on the terms specified in the contracts, and the process is being conducted lawfully in accordance with internal regulations and procedures.”

Meanwhile, it has been confirmed that the National Pension Service’s Audit Office has launched a re-audit regarding allegations of abuse of authority and violations of operational authority by the Real Estate Investment Division.