Saturday , January 23 2021

Elliott, KCGI, etc … A sense of authenticity



Following the Hyundai Motor Group, the Hanjin Group is also targeted by activism funds. While nominally committed to improving corporate governance and increasing shareholder value, it is actually threatening management rights with payments. Sharpen the fact that national companies are vulnerable to governance.

According to the industry, on November 16, it is noted that the actuarial funds are urging domestic companies to improve their governance structure and prepare measures.

Investment company Grace Holdings, a KCGI-based private equity fund management company, announced on June 15 that it acquired 9.0% (532,2666 shares) of Hanjin Holdings, a holding company of the Hanjin Group, through the acquisition.

KCGI is a private equity fund founded by Kang Sungbu, known as the first generation of the domestic activism fund. Grace Holdings announced its intention to acquire a stake in Hanjin Holdings and said it would participate in management.

At present, Hanjin Carl holds 28.95% of related parties, including Cho Yang-ho. In addition, the company has a 8.35% stake in National Pension, 5.03% in Credit Suisse and 3.81% in Korea Investment Trust Management. Grace Holdings secured a 9.0% stake and quickly became the second largest shareholder.

There is concern that if Grace Holdings brings together institutional investors or small investors, the Hanjin Group's management rights may be threatened. If the board of directors is incorporated by the replacement of the board of directors of the shareholders' meeting, it will also affect the general management of the Hanjin Group.

Hanjin Kal is a holding company of the group because it owns 29.96% of Korean Air, 22.19% of Hanjin Corp., Jin Air 60.0% and Carl Hotel Network 100%.

Behavioral fund attacks also appeared in the Hyundai Motor Group.

Hyundai-Kia Automotive Group announced a review of its corporate governance structure in May, which took over the Hyundai Mobis modules and the Hyundai Glovis AS parts.

Eliot sent a letter to the three directors of the Hyundai Motor Group, including Hyundai Motor, Kia Motors and Hyundai Mobis, demanding a return to shareholders.

The Hyundai-Kia Automotive Group said it had a capital surplus of 8-10 trillion won for Hyundai Motor and 4 to 6 trillion won for Hyundai Mobis. In the end, he claimed to return up to 16 trillion won of surplus capital to shareholders.

He also emphasized the need to work with Eliot and other shareholders to improve corporate governance by appointing independent external directors to the board of affiliates of the Hyundai Motor Group.

Experts point out that the authenticity of activism funds is questionable.

Kim Jin-sung, head of the Korea Corporate Governance Team, said: "If behavioral funds want long-term growth of the company, it is not desirable to demand dividends." "He said.

The problem is that, in addition to Eliot and KCGI, behavioral funds may have more internal corporate attacks.

Kim said: "Hyundai Motor and Hanjin will likely become additional examples." Domestic companies should use these cases as a lesson and make them an opportunity to improve corporate governance. "

This means that institutional investors and minority shareholders will not participate in the unreasonable demands of activism funds.

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