5-Stage Investment, Over 5%, Held for More Than 5 Years
Stock Price of SBS Surges After Eollain Investment News
Lee Chang-hwan, CEO of activist fund Align Partners Asset Management (Align), announced that going forward, he plans to "hold more than 5% of a single stock for over 5 years." In a recent interview with Asia Economy, Lee said, "We plan to continue presenting new content," adding, "So far, we are at stage 2, but we have plans up to stage 5."
Align recently made equity investments in SM Entertainment (SM), a financial holding company, and SBS. The exact size of the holdings was not disclosed, but the stake is estimated to be less than 5%.
If Lee’s plan is followed, the SM equity investment represents stage 1, which showed improvements in corporate governance; the financial holding company investment, which demonstrated shareholder-friendly dividend policies and capital allocation, corresponds to stage 2; and the SBS equity investment corresponds to stage 3.
Following rumors of Align’s stakeholding, SBS’s stock price surged sharply. On February 20, SBS’s stock price rose 5.69% compared to the previous day, followed by an 8.77% jump on the 21st, closing at 46,500 KRW. Although it plunged 10.75% on the 22nd, it closed at 42,700 KRW on the 24th, up 2.89%. Compared to the beginning of the year, it has risen more than 20%.
Align appears to have judged that SBS’s operating profit and other earnings have more than tripled compared to the COVID-19 pandemic period, but the company’s stock price has not fully reflected this.
Align has presented various opinions to SBS’s management to enhance corporate value. Unlike with SM or the bank stocks, there are currently no plans to conduct a public shareholder campaign regarding SBS. Align has recommended an outside director. SBS plans to appoint Lee Nam-woo, a visiting professor at Yonsei University Graduate School of International Studies, as an outside director and audit committee member at the regular shareholders’ meeting next month. Lee Chang-hwan said, "I do not want to be seen as too combative." He added, "We want to establish ourselves as a rational and long-term operating fund."
He plans to take responsibility for resolving the SM incident for the time being while focusing on fundraising. Lee said, "In terms of amount, we aim to reach total assets under management (AUM) of 1 trillion KRW this year." He explained, "I plan to briefly visit Hong Kong at the end of February for fundraising, prepare for shareholder meetings in March, and from April onward, mainly travel abroad to focus on raising funds from institutions." He also emphasized, "There is a lot of foreign media attention due to the SM-HYBE incident, and we intend to continue shareholder activism regarding SM with full responsibility until the end."
Align has conducted shareholder activities aimed at increasing shareholder value targeting SM and banks. Starting with the appointment of an auditor at the regular shareholders’ meeting in March last year, Align demanded various corporate governance improvements at SM. They pointed out the need for early termination of the contract with Like Planning, which was identified as a cause of shareholder value erosion, restructuring of the board of directors, and introduction of a multi-producing system. Due to Align’s aggressive activities, the largest shareholder, Mr. Lee Soo-man, ended up selling his stake to HYBE, the agency of BTS.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
