Korean activist fund KCGI buys Meritz Asset Management

A consortium led by Korea Corporate Governance Improvement Fund (KCGI), a local activist fund, said on Jan. 9 it signed a share purchase agreement last Friday to acquire a 100% stake, or 2.6 million shares, in Meritz Asset Management Co.

The deal value was not disclosed, but market watchers said it amounts to 50 billion won ($40.2 million). The consortium includes local construction company Hwasung Industrial Co., sources said.

"Our consortium and Meritz Asset Management agree to maximize shareholder's value through mid-to-long-term investment. KCGI will locate the undervalued shares with great potential and use strategies optimized to increase the company’s profits," said KCGI CEO Kang Sung-boo.

Meritz Asset Management, within South Korea’s Meritz Financial Group Inc., is managing 3 trillion won in assets. The group is said to have decided to sell off the asset management arm as former CEO John Lee in June was accused of violating capital market law and immediately stepped down.

The asset management firm, which had posted operating profit for 12 years, swung to red in the first half of 2022 with a 2.8 billion won loss.

KCGI is understood to have bought Meritz Asset Management to boost its shareholder activism with the asset manager’s public fund investors.

The activist fund reaped about a twofold return in three years early 2022 as it exited its investment in Hanjin KAL Co., the parent company of Korean Air Lines Co. Hoban paid 564 billion won for a 13.97% stake, excluding a call option to buy a 3.44% stake at the time.  

Last December, KCGI acquired a 5.58% stake in dental implant maker Osstem Implant Co. which revealed itself as the victim of the largest-ever embezzlement scandal for a Korean listed company in January 2022, to improve the corporate governance and raise the undervalued.

Write to Ji-Eun Ha at hazzys@hankyung.com
Jihyun Kim edited this article.