Palliser Capital (UK) Ltd says South Korean investors are becoming increasingly receptive to foreign-led shareholder activism, with local stakeholders showing more willingness to challenge management at family-controlled conglomerates, according to a report by Reuters.
The fund has pushed for strategic changes at LG Chem, including reducing the firm’s 80% stake in its subsidiary LG Energy Solution, in an effort to unlock shareholder value. Palliser is among the top 10 shareholders of LG Chem, although the exact size of its holding has not been disclosed.
James Smith, Palliser’s CIO and a former Elliott Investment Management veteran, said engagement with local investors has improved significantly, making it easier to gain support for activist proposals. He noted that a decade ago, foreign investors faced a “strong presumption of negativity” in Korea, but now local shareholder activism is starting to take root.
Smith highlighted the role of regulatory reforms under President Lee Jae Myung, aimed at boosting shareholder returns and narrowing the so-called “Korea discount” — the lower valuation of domestic companies relative to global peers due to low dividends and opaque chaebol structures.
Palliser has experience influencing chaebol management. In 2024, the fund successfully proposed changes at SK Hynix’s holding company, and Smith noted that even if LG Chem’s upcoming annual general meeting does not fully approve its proposals, minority shareholder votes could send a clear signal for change.
LG Chem unveiled a plan in November to reduce its stake in LG Energy Solution to around 70% while maintaining a shareholder return program targeting 30% of proceeds, though only 10% of proceeds would go toward dividends. Palliser criticised the plan for lacking detail and suggested that buybacks could be a more effective way to return value to shareholders.
Smith stressed that continued regulatory support will be key in overcoming resistance from the chaebol system, and that activist investors now have a more significant opportunity to influence corporate governance in South Korea.
