STIC Investments draws activist interest, including Align Partners

STIC Investments Inc., South Korea’s only listed private equity firm, has become the latest target of shareholder activism as Seoul-based Align Partners Capital Management Inc. joined the US private equity firm Miri Capital in building up a stake.

Align Partners has raised its shareholding in STIC Investments to 6.64%, according to its regulatory filing on Friday. Its share purchase followed Miri Capital becoming the second-largest shareholder in the domestic private equity firm with a 10.8% stake.

Align Partners’ shareholding in STIC Investments is estimated at 360 billion won ($245 million), based on the current market price.

The move comes as STIC Investments founder and Chairman Do Yong-Hwan, 68, is approaching retirement, while Korean buyout firms are increasingly targeting companies with poor governance to extract better returns.

Amid the rise of homegrown investment firms in South Korea, STIC has been active in small- and medium-sized M&A deals.

Align Partners, founded and led by Lee Changwhan, a former KKR and Goldman Sachs banker, has gradually increased its shareholding in STIC in open-market trade.

Between March 20 and 27, it had aggressively snatched up the shares, according to investment banking sources. During the period, STIC’s share price soared 28.8% to 9,440 won.

In 2023, Align Partners made headlines with its shareholder campaign against K-pop pioneer SM Entertainment Co., sparking controversy and criticism toward the fund.

Last year, it expanded its campaign to Doosan Bobcat Co., urging the construction machinery maker to implement measures aimed at boosting shareholder returns.

Last month, it submitted shareholder proposals to Coway Co., a water purifier and bidet rental company, before the latter’s annual general meeting, demanding greater transparency of its governance structure.

Lee founded Align Partners in 2021 to leverage his experience and deep understanding of South Korea's M&A market and PEF industry ecosystem.

He viewed STIC Investments as undervalued compared to other listed global PE houses.

Boston-based Miri Capital described itself not as an activist, but a "consultavist" as it seeks to enhance corporate value by connecting its portfolio companies with relevant player firms in their supply chains, as well as offering business advice.

It was said that Align Partners and Miri Capital have separate under-the-table discussions with STIC Investment’s top management about business proposals and strategic advice.

They are understood to have suggested that the Korean PE house aggressively engage with investors through investor relations meetings to address its undervaluation.

Industry sources said the two activist funds are unlikely to launch campaigns against STIC in the immediate term.

But their share accumulation is posing a threat to STIC’s ownership structure. Its chairman, Do Yong Hwan, 68, owns 13.46% of the firm.

Together with the family and company executives, they own a combined 19.45%, only slightly more than the 17.42% jointly held by Align Partners and Miri Capital.

Write to Jong-Kwan Park at pjk@hankyung.com
 

Yeonhee Kim edited this article.