A South Korean affiliate of Australia's Macquarie Group has pulled its investment from a Seoul subway line after a controversial dispute over fares with the municipal government, city officials said Wednesday.

Macquarie Korea Infrastructure Fund (MKIF), the second-largest shareholder of the Seoul Metro Line 9 Corp. with a 24.53 percent stake, sold its shares to three major local life insurance companies, they added.

The three -- Kyobo Life, Hanwha Life and Shinhan bank -- bought the shares owned by both MKIF and Hyundai Rotem, the largest shareholder with a 25 percent stake, by investing a total of 746 billion won ($700 million), they said.

The city government and MKIF have been wrangling over fares since last year when Seoul Metro Line 9 Corp. announced its plan to raise its basic fare by 500 won from 1,050 won.

Facing stern opposition from the city government, the railway company filed a lawsuit but was rejected by a local court in May.

The incident had widely stoked speculations that MKIF would terminate the contract.

The two parties have also been in conflict over the city government's plan to abolish the so-called minimum revenue guarantee, which obliges Seoul to make up for any losses incurred every year.

The city government said the new investors will not be directly involved in subway operations in order to prevent the repeat of such fare dispute.

After concluding the deal, Seoul Mayor Park Won-soon told reporters that "Seoul Metro Line 9 Corp. will now be run in a direction that would benefit the citizens."

Subway line No. 9 is the only private-run subway in the city.

The municipal government operates the other eight lines via two companies that run four lines each.

MKIF inked a deal with the city government in 2005 to invest in the subway project, which has drawn public outcry over its "unfairness" by allegedly allowing Macquarie to pursue excessive gains without any risk-taking. (Yonhap News)