On one side of the meeting room at Align Partners Asset Management, an activist fund manager, sits a printed research volume. Titled "Align Partners and SM Entertainment: Korean Shareholder Activism Meets K-pop," it is a case study published last February by Harvard Business School (HBS). Charles C.Y. Wang, the HBS professor who led the research, described Align Partners' activist campaign targeting SM Entertainment as "the first time in history that a Korean listed company accepted all the demands of a local shareholder." It is unusual for a leading U.S. business school to spotlight a domestic asset manager's activist campaign.
Founded in January 2021, Align Partners has driven corporate value improvement — known in Korea as "value-up" — by pressing listed companies to close valuation gaps, strengthen shareholder returns and improve governance transparency. Its most cited successes are its SM Entertainment campaign, which rallied minority shareholders with a stake of just over 1% to force a complete governance overhaul, and its financial holding company campaign, which pushed value-up proposals through all seven of Korea's major commercial banks. Align Partners drew the capital market's attention with an approach that did not shy away from proxy fights at shareholder meetings, board reshuffles and public opinion battles through open shareholder letters.
In an interview with Seoul Economic Daily on the 12th, Align Partners CEO Lee Chang-hwan said, "The fundamental difficulty of an activist campaign is that at some companies, controlling shareholders wield powerful control with only a small stake." Lee added, "Recently, companies' countermeasures have grown more sophisticated, so creating change now requires greater effort." The remark reflects that, more than five years after the firm began its campaigns in earnest, corporate defenses have grown more solid.
Born in 1986, Lee pored over economic newspapers from middle school and helped with his mother's IPO subscription investments. After entering Daegu Foreign Language High School, Lee made headlines on KBS's "Quiz Korea," becoming a "Quiz Hero" as the youngest winner with the highest prize money. "Beyond schoolwork, I read books on economics, history, science and computing, developing curiosity about a wide range of fields," Lee said. In particular, reading "Street Smarts," a book by American investor Jim Rogers, inspired a dream of becoming a CEO who travels the world running businesses on foot. Lee entered Seoul National University's business school in 2005 and graduated summa cum laude in 2011.
What drew Lee seriously into investing was activity in Seoul National University's value-investing club, "SNU Value." At the time, the university already had an investment research group called "SMIC," which had produced figures such as Hwang Sung-hwan, CEO of Timefolio Asset Management, and Kang Sung-boo, CEO of KCGI. But Lee, together with an upperclassman, agreed to "create a group aiming for a somewhat more hands-on style of value investing." At SNU Value, Lee analyzed the fundamentals of stocks by personally visiting the suppliers and buyers of the companies under study. He went beyond simply examining investor-relations (IR) materials to find out for himself a company's strengths, weaknesses and areas for improvement. "When I analyzed Interojo, a contact-lens maker, I went around to optical shops and factories asking how Interojo's products compared with rivals in strengths and weaknesses," Lee recalled. "I posted the analysis reports on my blog, and because there were no analyst reports on Interojo at the time, they drew a lot of attention."
The idea of founding an activist fund manager took shape at Lee's first job, the global investment bank (IB) Goldman Sachs. There, Lee handled mergers and acquisitions (M&A) and capital-raising advisory work, dealing mainly with domestic listed companies. Helping companies raise funds, calculate valuations and conduct control transactions, Lee came to conclude that the low share prices of domestic listed companies were partly due to controlling shareholders' weak commitment to boosting value. "There are cases where a low share price is advantageous to controlling shareholders when they raise capital or pass a company on to the next generation," Lee said. "Because controlling shareholders often made no attempt to raise corporate value, I thought there would be an opportunity if I set up an activist manager and ran campaigns properly." Lee added, "Even though there had long been a problem of controlling shareholders wielding immense control with small stakes, campaigns looked difficult, so I waited for the social tide to change and launched the firm in 2021."
Before founding Align Partners, Lee spent time at Kohlberg Kravis Roberts (KKR), the world's largest private equity fund (PEF) manager. Joining as a founding member of KKR's Seoul office, Lee took part in large M&A deals such as the sale of Oriental Brewery (OB) and learned how to assess a company's intrinsic value. "A PEF manager doesn't simply look at the share price but grasps the fundamentals of a business to buy and sell companies," Lee said. "That's when I was able to develop much of my perspective on examining a company's core competitiveness."
In the early 2010s, when Lee graduated from university, it was rare for business-school graduates of Korean universities to go straight into the IB industry. At the time, students' preferred paths were jobs at financial state-owned enterprises, sitting for the certified public accountant exam, or joining global consulting firms. Lee entered the industry when IBs and PEF managers were still unfamiliar in Korea, and in 2021 he set out to found his own activist fund manager. When working in the IB industry, Lee was so absorbed in the work that he left the office around 3 a.m. every day. The decisiveness to choose a path others hesitate to take, and the intensity and persistence with which Lee has continually broken through a grueling elite track, now form the foundation of Align Partners' meticulous yet relentless activist campaigns.
The most successful investment Lee singled out is the campaign targeting seven financial holding companies. In 2023, right after leading SM Entertainment's governance overhaul, Align Partners launched a shareholder campaign targeting Korea's seven listed financial holding companies (KB, Shinhan, Hana, Woori, JB, BNK and iM). At the time, the financial holding companies were posting record profits amid rising interest rates, yet their price-to-book ratios (PBR) hovered around 0.3. Their shareholder return ratio, combining dividends and share buybacks, averaged 26% — low compared with major overseas banks that typically exceed 60%. That left ample room to raise shareholder value through a campaign.
Align Partners located the cause of the financial holding companies' undervaluation in risk-weighted assets (RWA). At the time, the financial holding companies were aggressively expanding RWA to grow in size, but since capital-adequacy rules required them to build up capital, they struggled to return profits to shareholders even when earnings came in. Having acquired stakes in the seven financial holding companies, Align Partners sent open shareholder letters to each firm's board at once, demanding a shift in management approach from expansion of scale to capital efficiency. Minority shareholders and other market participants, along with regulators, responded positively, and in the end all seven financial holding companies — starting with Shinhan Financial Group — accepted Align Partners' proposals. It reshaped the entire landscape of Korea's financial industry. "When we first started the financial holding company campaign, many viewed success as 'impossible,'" Lee stressed. "In the end, the shareholder return ratios of Korea's major banks rose to the 50% range and their share prices more than doubled accordingly, making it a campaign that served as a catalyst for change across the industry."
Views in Korean society on shareholder activism are divided. Some voices champion the active exercise of shareholder rights, while others cast a negative eye on activists as a "force" seeking short-term gains. Not a few also harbor antipathy toward the very idea of a fund manager confronting the controlling shareholders who hold management control. "Our concern is that if a company is listed and publicly traded, shareholder rights should be equal," Lee said. "We run campaigns from a long-term perspective, based on the shareholder-capitalism principle that shareholders are the owners of a company."
Social changes such as the sharp rise in the number of retail investors in Korea and three rounds of Commercial Act amendments are becoming the foundation for the expansion of shareholder activism. Minority shareholders recently
