The world’s biggest asset manager, BlackRock, has offloaded a large chunk of its stake in Daelim Industrial after the South Korean company announced a business separation last month that led to it being dropped from the country’s MSCI index.

BlackRock’s shareholding in Daelim Industrial was reduced from 5%, or 1,740,177 shares, to just 1.83%, or 637,623 shares, as of December 31 last year, according to a regulatory filing on Monday (January 4). The asset manager had retained the previous stake since January 2019.

The sale came after the South Korean company announced a spin-off plan to create two independent companies, DL Holdings and DL E&C, to unlock its value, which was approved by shareholders earlier in December. Daelim Industrial went into a trading halt on the Seoul stock exchange on December 28. DL Holdings and DL E&C will be listed once the separation is completed, and will start trading on January 25.

BlackRock sold its shares in the open market to cash out its investment, the asset manager said in the filing. It holds shares in the company for a “non-engagement investing” purpose, which is one of three categories of investing purpose defined by the watchdog Financial Services Commission, and the least active.

Nearly 900,000 shares in the company were offloaded by the asset manager’s subsidiaries, including BlackRock Fund Advisors, BlackRock Institutional Trust Company, BlackRock Advisors (UK) Limited and BlackRock Investment Management (UK) Limited, for only one day on December 28.

The company’s stock price ended at 83,000 won ($76.24) on that day, down 6.11% from the previous close. The price was lower than the range of 97,200 to 97,800 at the beginning of January 2019 when BlackRock became one of the major shareholders in Daelim Industrial with its 5% stake.

The move by the passive manager is apparently intended to reduce its exposure as it anticipates greater short-term uncertainty, industry watchers said. With the separation, Daelim Industrial was removed from the MSCI Korea Index on December 28, leading to a divestment of shares in the company by global passive investors.

“As much as 130 billion won worth of divestment could occur as a result of the company being dropped from MSCI Korea Index,” said Kwak Seong-hun, an analyst at Shinhan Investment. (Reporting by Jeong-wan Lee)