For decades, foreign investors challenging South Korea’s family-controlled conglomerates (chaebols) faced a wall of local resistance. Today, that wall is officially crumbling.
James Smith, CIO of London-based hedge fund Palliser Capital, notes a massive structural shift: local Korean investors are now actively embracing foreign-led activism to eliminate the notorious “Korea discount.”
📉 THE BATTLE FOR LG CHEM:
- The Target: Palliser is aggressively pushing petrochemical giant LG Chem to slash its 80% stake in subsidiary LG Energy Solution.
- The Pushback: LG Chem offered a mild concession (lowering the stake to 70% with minimal dividend allocation). Palliser is demanding concrete share buybacks instead.
- The Track Record: Palliser already successfully forced changes at SK Hynix’s holding company in 2024.
🏛️ THE MACRO TAILWIND: This shift has state backing. President Lee Jae Myung’s administration is actively rolling out regulatory reforms to force chaebols to boost shareholder returns and align with global governance standards.
💡 THE BOTTOM LINE: Even if activist proposals lose at upcoming AGMs, the leverage has fundamentally shifted. By rallying minority shareholders, funds are sending a deafening signal to management: the era of prioritizing controlling families over ordinary shareholders is over.
👇 Emerging Market Investors: Will these government-backed reforms finally eradicate the “Korea discount,” or will the chaebols successfully resist this new wave of activism?