Activist Align Partners Says "A Plus Asset Must Shed Non-Core Assets and Scale Up Its Value"

On February 11, activist fund Align Partners announced that it had sent a public shareholder letter containing eight key agenda items to A Plus Asset and submitted shareholder proposals, including the appointment of audit committee members. Align Partners is the second-largest shareholder of A Plus Asset, holding an 18.05% stake.

Align Partners pointed out that A Plus Asset is significantly undervalued in the market despite its strong operating performance. It argued that A Plus Asset's price-to-book ratio (PBR) is around 1.8 times, which is markedly lower than that of its peer Incar Financial Services (3.2 times) and the average of major overseas companies (3.4 times).

The main reasons cited were a lack of focus on its core insurance agency (GA) business and the diversion of resources into non-core businesses. Align Partners claimed that A Plus Asset is increasing management risk by investing in listed stocks unrelated to its core business, and is weakening its consolidated profitability by holding low-profit subsidiaries such as NanoEntek.

Accordingly, Align Partners requested that the board address eight key items, including: the prompt announcement of a corporate value enhancement plan (Value-Up Plan), the disposal of non-operating financial assets, the sale of low-profit subsidiaries, and securing competitiveness through the acquisition of small and mid-sized GAs.

It also submitted shareholder proposals aimed at improving corporate governance. Along with amendments to the articles of incorporation to separate the roles of CEO and chair of the board and to establish a compensation and evaluation committee, it recommended Heo Geumju, former Executive Director at Kyobo Life Insurance, and Paeng Yongun, former Head of Division at Shinhan Life, as candidates for independent audit committee members.

In particular, Align Partners raised issues with a compensation structure concentrated on a specific individual. It pointed out that the remuneration paid to Director Kwak Geunho alone accounts for a substantial portion of the total remuneration of all registered directors and that it mainly consists of fixed pay that is not linked to performance.

Lee Changhwan, CEO of Align Partners, stressed, "A Plus Asset is a sound company with strong platform competitiveness, but its undervaluation has persisted due to the diversion of resources into non-core businesses and the lack of independence of the board of directors. The purpose of this shareholder proposal is to enhance corporate value by focusing on the core business and normalizing governance."

He added, "We call on the A Plus Asset board of directors to provide a public response and announce a Value-Up Plan reflecting our proposals by March 11, and we urge the company to complete the convening notice for this year's general shareholders' meeting at an early date in accordance with the relevant regulations, given that shareholder proposals have been submitted."