First-Generation PEF Stick Investment Changes Hands to US Fund (Comprehensive)

Miri Capital Secures Management Control with 25% Stake
Management Dispute with Activist Bloc Effectively Concludes
Chairman Do Steps Back to Support Smooth Transition
Gaining LP Consent and Staff Buy-In Remains a Challenge

Yonghwan Do, Chairman of Stick Investment

Yonghwan Do, the founder and chairman of Stick Investment, a first-generation homegrown private equity fund (PEF) manager, is selling most of his shares to the US-based investment firm Miri Capital. Having become the firm’s definitive largest shareholder, Miri Capital has announced its intention to continue Stick Investment’s growth as a long-term investor, rather than just a financial investor.

On January 20, Stick Investment announced that Chairman Do had signed an agreement to transfer 11.44% (4,769,600 shares) out of his 13.46% stake to Miri Capital’s “Miri Strategic Emerging Markets Fund LP.” The contract is valued at approximately 60.1 billion won, with a per-share price of 12,600 won. This is 25.2% higher than the closing price of 10,060 won on the day, which itself was up more than 10% from the previous day.

Miri Capital, Pursuing 'Consultavist' Strategy, Becomes Largest Shareholder of Stick Investment

As a result, Miri Capital’s stake will rise to 25.0%, cementing its position as the largest shareholder. Founded in 2021, the US-based asset management firm Miri Capital advocates a “consultavist” approach, combining consulting and activism. Rather than engaging in aggressive management disputes, it has pursued long-term, partnership-based investments aligned with the interests of portfolio company management. In Korea, it has mainly invested in small and mid-cap KOSDAQ-listed companies such as WISE iTech, Genian, Yousu Holdings, and Gabia.

Miri Capital first emerged as a shareholder of Stick Investment in August 2023, acquiring a 5.01% stake. Since then, it has continued to increase its holdings, eventually surpassing Chairman Do’s personal stake by the end of last year. The rationale was that Stick Investment was significantly undervalued compared to overseas-listed PEF managers. According to Stick Investment, “Miri Capital has maintained a friendly relationship, discussing the company’s development direction and assisting in attracting overseas limited partners (LPs).”

Chairman Do Decides to Step Down as Activist Bloc's Pressure Mounts

Chairman Do, who had been determined to defend management control, is reported to have decided to step down starting last year. This was due to the activist bloc’s stake, including Align Partners (which increased its stake to about 7.6%) and domestic asset manager Petra Asset Management (5.09%), rising to around 26% when combined with Miri Capital. This far exceeds the roughly 19% held by Chairman Do and related parties. Chairman Do attempted to defend his control by transferring about 13% of treasury shares to a white knight, but this effort failed due to opposition from the activist alliance.

Afterward, Chairman Do resolved to retire and reportedly sought to sell his shares to various potential buyers, including major domestic financial holding companies and conglomerates. However, he ultimately chose Miri Capital, with whom he had already communicated several times and who had expressed willingness to manage the company for the long term. It is also believed that partnering with Miri Capital, which had previously been grouped with the activist bloc, would help end the management dispute structure.

Chairman Do to Support Smooth Transition as 'Founding Chairman'... Persuading LPs Remains a Task

Chairman Do is scheduled to step down after his term as director ends in March. However, as a shareholder retaining a 2% stake and with the special title of “Founding Chairman,” he plans to continue supporting Stick Investment. This is intended to help ensure a smooth transition so that the firm’s investment philosophy and organizational identity remain stable. Stick Investment has made it clear that, despite the change in the largest shareholder, its fund management, investment decision-making structure, Investment Committee (IC) operations, and core management personnel and organizational structure will remain unchanged.

Convincing limited partners (LPs) is another remaining challenge. Typically, a change of control at a PEF manager requires the consent of all LPs or at least two-thirds. Major LPs such as the National Pension Service, Teachers’ Pension, and Private School Pension may raise concerns about Miri Capital’s foreign ownership. In such cases, they could even demand fund liquidation. For this reason, Stick Investment may provide assurances that existing management, including PE Division Head Chae Jin-ho, will continue to manage the funds.