Activist fund Oasis boosts Korea team amid investor-friendly policy shift

Hong Kong-based activist fund Oasis Management is ramping up hiring for its Korea team as Seoul’s push to boost corporate value and strengthen minority investor rights paves the way for increased shareholder activism.

The new Korea-focused hires follow last year’s addition of a junior analyst dedicated to the South Korean market, according to investment banking sources on Tuesday.

They will be based in Hong Kong and tasked with engaging top management of South Korean companies, signaling it is stepping up activist efforts in Asia’s No. 4 economy. Oasis Management runs offices in Hong Kong, Japan, the US and the Cayman Islands.

Founded in 2002, Oasis has focused on Asia with a track record of targeting Japanese companies, including game company Nintendo Co., electronics manufacturer Kyocera Corp. and camera and medical equipment maker Canon Inc. It is currently leading a shareholder campaign against chemical and cosmetics maker Kao Corp.

“South Korea is becoming the next target of major global activist funds,” said an investment banker, noting that government-led initiatives for governance reforms and regulatory shifts favoring minority shareholders echo similar moves seen in Japan.

“They are still heavily focused on Japan, merely stopping over in Korea during their Japan trips. But they are preparing to scale up operations in South Korea,” he added.

Oasis began investing in Korean companies about four to five years ago, but has yet to launch any activist campaigns in the country.

Last year, it became the first foreign fund to join the Korean Corporate Governance Forum, a non-profit organization registered with the regulatory Financial Supervisory Commission.

The forum, established by institutional investors, lawyers and academics, aims to improve the corporate governance of Korean conglomerates and financial companies.

STEEL PARTNERS

US-based Steel Partners is looking to revive its activist campaigns in Korea. Last month, its officials visited Seoul to meet with major Korean activist funds and study the market, according to the sources.

It made its name in 2006 with a joint campaign alongside renowned activist investor Carl Icahn to push for governance reforms at KT&G Corp., South Korea's No. 1 tobacco and ginseng supplier.

However, it exited the Korean market following a regulatory probe into alleged unfair trade practices related to its KT&G investment.

Global activist investors are welcoming the government-led initiative to tackle the Korea Discount -- the persistent undervaluation of Korean companies relative to their intrinsic value.

Seoul is calling on companies to implement shareholder-friendly measures, including boosting dividend payouts and retiring treasury shares.

Such moves are expected to improve the odds for activist funds to unlock value through campaigns, as they have successfully done with Japanese companies.

Last month, the opposition-controlled National Assembly passed an amendment to the Commercial Act. But it was vetoed by Finance Minister Choi Sang-mok, who was then serving as acting president following the impeachment of President Yoon Suk Yeol.

Further boosting momentum for shareholder activism, potential presidential candidate Lee Jae-myung pledged on Monday to move forward with the revised Commercial Act if elected, during a meeting with research heads of domestic brokerage firms.

Lee, head of the opposition Democratic Party, is leading the polls by a wide margin for the June 3 snap presidential election. Former President Yoon Suk Yeol was ousted by the Constitutional Court early this month on the back of his ill-fated martial law attempt.

An amendment to the Commercial Act will include clauses expanding directors’ fiduciary duties to better protect the interests of minority investors, while making it mandatory for companies to introduce cumulative voting systems.

It also requires companies to elect audit committee directors separate from other board members, while capping major shareholders’ voting rights at 3% during the election process to ensure the committee’s independence.

The cumulative voting system allows shareholders to cast multiple votes, equal to the number of directors to be elected, to enhance minority shareholders’ influence in board appointments.

Write to Jong-Kwan Park and Jun-Ho Cha at pjk@hankyung.com
 


Yeonhee Kim edited this article.