Aegis Asset Management, Will the Largest Shareholder Change?

Son Hwaja Holding 12.4% Stake Considering Sale
May Become Obstacle to Sale Depending on Major Shareholders' Positions

It is reported that Son Hwaja, the major shareholder of Aegis Asset Management, is considering selling her shares.

According to the financial investment industry on the 29th, Son Hwaja, the widow of the late Kim Daeyoung, founder of Aegis Asset Management, is considering selling her 12.4% stake. Jo Gapju, head of the New Business Promotion Team at Aegis Asset Management, is also expected to sell his directly held 1.99% stake along with 9.9% held through his personal company together with Ms. Son.

The investment banking (IB) industry believes that if Ms. Son and Mr. Jo sell their shares collectively, they can receive a management premium, making it possible to sell under more favorable conditions compared to selling individually.

However, since there are quite a few major shareholders holding more than 5% stakes and due to the real estate market downturn, the sale process is expected to be challenging.

Looking at the shareholder composition of Aegis Asset Management, Daishin Securities (9.13%), Woomi Global (9.08%), Geumseong Baekjo Housing (8.59%), Hyundai Motor Securities (6.59%), Korea Land Trust (5.31%), and Taeyoung Construction (5.17%) hold more than 40% of the shares. Even if the stakes of the existing largest shareholders, Ms. Son and Mr. Jo, are acquired, if some major shareholders form an alliance, the position of the largest shareholder could be threatened. If Taeyoung Construction, which is currently undergoing workout, proceeds with stock sales as part of its corporate improvement plan, changes in the governance structure of Aegis Asset Management cannot be ruled out.

The recent downturn in the real estate market, which has worsened Aegis Asset Management’s profitability, could also be an obstacle. As of the end of 2023, out of 24.3 trillion KRW in entrusted assets, real estate funds account for 21.9 trillion KRW. Despite the COVID-19 pandemic in 2020, Aegis Asset Management continued its performance improvement trend in 2021 and 2022. However, with rising benchmark interest rates in major countries worldwide and the ongoing real estate market slump, profitability has deteriorated since last year. Operating profit and net profit for the first three quarters of last year decreased by 73.5% and 73.8%, respectively, compared to the same period the previous year. This was due to securities valuation losses, interest expenses, and increases in other operating expenses as well as selling and administrative expenses.

An industry insider said, "Ultimately, the seller’s willingness to sell is the most important factor," adding, "Considering the market atmosphere, there is a high possibility that the desired price will not be recognized."

Aegis Asset Management stated, "This is a matter for discussion among shareholders, but nothing has been officially decided yet."