London-based activist hedge fund Palliser Capital has publicly called on LG Chem to address what it sees as a significant market undervaluation, after revealing a stake of over 1% in the South Korean chemical and battery materials company, according to a report by the Korea Herald.
Speaking at a New York hedge fund activism conference, Palliser positioned itself as a long-term investor and one of LG Chem’s top ten shareholders. The fund argued that LG Chem’s market capitalisation of KRW28tn ($20bn) fails to reflect the value of its 79% stake in battery maker LG Energy Solution, which alone is worth approximately KRW84tn, according to Palliser.
“LG Chem trades at an extreme 74% discount to net asset value, the widest among all Korean conglomerates,” said James Smith, founder and CIO of Palliser. The fund highlighted that LG Chem’s valuation resembles a struggling petrochemical business, despite its battery assets comprising the majority of its value.
Palliser urged LG Chem to enhance board composition, implement a return-oriented capital allocation strategy, and execute buyback-in-kind using its LG Energy Solution shares. It also framed the move as an opportunity for the company to support broader capital market reforms in South Korea, referencing the government’s “Kospi 5,000” vision.
The activist push sparked a sharp market reaction, with LG Chem shares surging over 11% intraday to 395,500 won, marking the first time the stock has traded above 350,000 won in a year.
Palliser has a history of challenging South Korean conglomerates, including SK Square and Samsung C&T, to improve corporate governance and unlock shareholder value. The firm emphasised its ongoing engagement with LG Chem’s management team to realise the company’s full potential.
