Align Partners: "Stick Investment's Value-Up Plan Has the Right Direction but Lacks Details"

Calls for Concrete Implementation Plans

The activist fund Align Partners has expressed a positive view of Stick Investment's announced corporate value enhancement plan (Value-Up Plan), but criticized it for lacking detailed content. While Align Partners agrees with the overall direction, it stated that the basis for setting targets and specific implementation plans are insufficient.

On January 20, Align Partners released a statement saying, "We appreciate and welcome the fact that Stick Investment has generally accepted the core direction we proposed in our public shareholder letter. We also welcome Stick Investment's commitment to enhance shareholder communication, such as by strengthening the annual general meeting and announcing a corporate value enhancement plan once a year going forward."

However, Align Partners pointed out in detail that the Value-Up Plan disclosed by Stick Investment the previous day only presents the basic direction, and unfortunately, does not sufficiently provide the grounds for setting targets or specific implementation plans.

First, regarding the next-generation leadership succession plan, Align Partners noted that Stick Investment only announced its intention to establish such a plan, without specifying when or how it would be implemented.

Regarding the use and cancellation of treasury shares, Align Partners pointed out that the exact number of shares to be cancelled remains unclear and no schedule for cancellation has been provided. Align Partners criticized, "Of the 1.25 million shares previously announced to be granted to key management as stock-based compensation (RSU), apart from the initial 150,000 shares linked to achieving the target share price of 15,000 won, no details have been provided for the remaining 1.1 million shares."

Align Partners also expressed concern that the profitability improvement targets are insufficient. Stick Investment previously set a target of a 35% Fee-Related Earnings (FRE) margin and a 10% Return on Equity (ROE). Align Partners stated, "A 35% FRE margin is conservative compared to the global major private equity funds' average of 46.1% presented by the company or our own medium-term target of 45-50%. However, the reason for setting the target at 35% and the plan to achieve it have not been provided. Similarly, the 10% ROE target presented by the company is low compared to other PEF managers, but again, the rationale and plan for achieving this target have not been disclosed."

In addition, Align Partners criticized that other measures such as ▲restructuring the compensation system and ▲improving the independence and expertise of the board of directors remain mere slogans, lacking concrete implementation plans.

Align Partners stated, "As a shareholder of Stick Investment, we plan to continue to demand through management meetings and letters that Stick Investment address the shortcomings of the Value-Up Plan and fulfill its commitments as promised."