Align Partners has posted notable results this year even as companies raise their defenses against shareholder activism. Through a regular shareholders' meeting, the firm placed a separately elected audit committee member on the board of DB Insurance, a company listed on the KOSPI. It marked the first case in South Korea in which a shareholder-proposed director candidate was appointed at a listed company with a market capitalization above 10 trillion won ($7.2 billion). At Gabia, a company listed on the KOSDAQ, one non-executive director and one outside director proposed by Align Partners joined the board.
Align Partners is now regarded as one of the asset managers at the forefront of shareholder activism in South Korea. Its campaign targeting Stic Investments, a major domestic private equity fund (PEF) manager, is a success of a different kind. Align Partners intensified the campaign last October by raising its stake in Stic Investments to 7.6%. It formalized six demands, including the announcement of a next-generation leadership succession plan, the retirement of all remaining treasury shares, and improvements to the board's expertise and independence. The public campaign came to a close after founder and Chairman Do Yong-hwan handed his stake to Miri Capital, a U.S. financial investor, and Miri Capital, as the new largest shareholder, accepted many of Align Partners' value-up proposals.
Lee Chang-hwan, CEO of Align Partners, said on the 12th that Stic Investments was a case in which the campaign was concluded through an amicable agreement with the new largest shareholder. "Over the past year, we have carried out seven public campaigns and delivered results, confirming that our capabilities have risen to another level," Lee said.
Align Partners' medium- to long-term goal is to expand in scale. By increasing its assets under management (AUM), currently around 1.4 trillion won ($1 billion), the firm would be able to become a major shareholder in larger yet undervalued companies and run campaigns there. Another goal is to remain faithful to generating returns as a fund manager entrusted with investors' money while leaving positive precedents in the capital market. "There are still many plans and ideas we have not yet been able to carry out," Lee said. "I want to secure enough capital to invest sufficiently in the companies we want, and create more meaningful cases."
Last month, Align Partners launched a new campaign in the financial sector, drawing attention with a public proposal for a merger between BNK Financial Group and JB Financial Group. The boards of the two financial holding companies officially rejected the proposal, but Align Partners views the campaign from a medium- to long-term perspective. The combined share of the banks under BNK and JB in South Korea's won-denominated loan market has stagnated at 6% for a long time. Align Partners judges that standalone operations alone make it difficult to compete with the four major commercial banks. "Shareholder action can go beyond simply calling for higher dividends and move in a strategic and financial direction," Lee said. "For now, I believe we have succeeded in raising public interest in the structural crisis facing regional banks."
Although shareholder rights have been strengthened, with the Commercial Act revised three times over the past year, Lee said challenges remain for advancing South Korea's capital markets. He pointed to institutional barriers surrounding shareholders' meetings as the biggest obstacle to exercising shareholder rights. Many domestic companies disclose their business reports just one week before a shareholders' meeting, leaving domestic and foreign institutional investors without enough time to closely review the agenda. "There are still many institutional and non-institutional barriers that narrow the scope for exercising shareholder rights and weaken companies' incentive to pursue value-up," Lee said. "Simply overhauling the disclosure rules around shareholders' meetings would move South Korea's capital markets a step forward."
