이 기사는 2021년 04월 06일 07:50 thebell 에 표출된 기사입니다.

KCGI is likely to slash its stake in Hanjin KAL and turn its attention away from the holding company of the Hanjin Group as a three-way alliance led by the activist fund ceased to exist.

Three members of the alliance – KCGI, Bando Construction and Cho Hyun-ah, the elder sister of Hanjin Group chairman Cho Won-tae – decided to go separate ways last week, ending their joint fight against Hanjin KAL’s management that lasted about a year.

“The agreement between the three parties to jointly hold shares (in Hanjin KAL) expired as of April 1,” said KCGI in a filing last Friday. “We will continue to communicate and work with other shareholders with an open mind to improve Hanjin Group’s corporate governance and increase shareholder value.”

As its activist role against the conglomerate has become no longer clear, KCGI is likely to sell down its stake in Hanjin KAL in the future, with the timing depending on the stock’s price movement, industry watchers said.

Meanwhile, the investment firm will likely step up efforts to exit its investment in Daelim, the DL Group’s holding company, according to sources with knowledge of the firm’s plans.

KCGI acquired 32.6% of Daelim for 120 billion won ($106.4 million) in 2019, becoming the second largest shareholder. It has recently hired Samjong KPMG to sound out potential buyers for the company.

Over the past year, the DL Group has tried to increase the value of the conglomerate’s businesses by implementing a corporate governance restructuring to separate construction and petrochemical units as independent entities. It also offloaded non-core businesses including motorcycle maker Daelim Motorcycle.

KCGI is also planning to launch an asset management business to broaden its investment scope to include real assets such as real estate and infrastructure. Industry watchers expect the firm to run a newly created asset management unit as a separate entity. KCGI was cautious about commenting on this, saying nothing has been finalized.

Start of homegrown activism

While KCGI did not fully achieve what it aimed to do, its activist campaign has ultimately helped the Hanjin Group improve its financial condition and address its weaknesses, industry watchers said. The firm has also made a clear impact on the South Korean market where homegrown activism is in the early stages.

The saga between KCGI and the conglomerate highlights the importance of the governance factor in ESG – or environmental, social and governance – matters.

“Companies with good corporate governance in place usually have higher market valuation metrics than peers,” said a corporate governance specialist. “Investors are paying greater attention to ESG matters, and KCGI’s role as activist clearly showed the importance of the G.”

KCGI’s activist strategy also provided lessons to other homegrown activist funds, observers said.

“KCGI sought to increase voting power by striking an agreement to join forces with Bando and Cho Hyun-ah, but the three-party partnership also caused delays in decision-making,” said an industry insider. (Reporting by Ar-rum Rho)