Capital Group takes 5.6% stake in South Korean tobacco giant KT&G

What's the deal? Capital GroupDealroom has a profile for this one. Try Dealroom →, one of the world's largest asset managers, has acquired a 5.61% stake in South Korean tobacco company KT&G. The purchases were made on April 22 and May 4, according to a regulatory filing on May 8.

The investment was made through Capital Research and Management Company, the group's investment management arm. The move places Capital Group among KT&G's prominent foreign shareholders, alongside BlackRock, First Eagle Investment Management, and Singapore's sovereign wealth fund GIC.

Foreign investors now hold 45.5% of KT&G's outstanding shares.

Why now? KT&G is riding a wave of strong earnings driven by overseas cigarette sales. First-quarter revenue rose 14.3% year-on-year to 1.7 trillion won ($1.2B), while operating profit climbed 27.7% to 364.5 billion won ($250M).

The company has pointed to its expanding international business as the engine of growth and reaffirmed its commitment to shareholder returns, including higher dividends and planned share buybacks in the second half of the year.

KT&G shares hit a record high of 183,500 won ($125) on the day of the disclosure, closing above the 180,000 won mark for the first time.

The signal: Capital Group's move into KT&G underscores a broader trend of major global asset managers building positions in mature, cash-generative South Korean companies at a time when the country's "corporate value-up" programme is pushing firms to boost shareholder returns. With foreign ownership now approaching half of KT&G's outstanding shares, the tobacco giant's international expansion story and commitment to dividends and buybacks appear to be resonating well beyond its domestic market.

Read more: n.news.naver.com