Domestic asset managers known for activist investing posted large cash gains from dividends last year, helped by rising share prices at companies they targeted. Align Partners, one of the most aggressive activist firms, paid out more than 15 billion won in cash dividends.
According to the financial investment industry on April 30, Align Partners paid 15.1 billion won in cash dividends out of about 23.9 billion won in net profit last year, a payout ratio of 63%. The dividends effectively went to a single owner. Align Partners’ largest shareholder is Align Holdings, which owns 100% of the firm, and Align Holdings is wholly owned by CEO Lee Chang-hwan. Under that ownership chain, the full 15.1 billion won dividend is effectively attributable to Lee.
The size and structure of Lee’s dividend stands out even among other activist-oriented managers. KCGI Asset Management, known in the past as the “Kang Seong-bu fund,” paid out all of its 6 billion won in net profit last year as cash dividends, a 100% payout ratio. KCGI holds 60% of KCGI Asset Management and HS Hwasung holds 40%, meaning about 3.6 billion won went to KCGI and about 2.4 billion won to HS Hwasung. KCGI’s largest shareholder is CEO Kang Seong-bu and related parties, who hold about 64%. Based on that, the owner side, including related parties, is estimated to have received about 2.3 billion won in dividends.
Another activist fund manager, Truston Asset Management, paid about 4.1 billion won in cash dividends through its year-end payout out of about 17.9 billion won in net profit. CEO Hwang Seong-taek is the largest shareholder with 50.3%, with 29.2% held as treasury shares and about 20.5% held by other minority shareholders. Based on his stake, Hwang’s dividend income is a little over 2 billion won.
Industry officials said Align Partners’ ownership structure as a de facto one-person company helps explain the gap in dividend outcomes. They also said Align Partners’ investment gains likely increased sharply, as the share prices of companies in which it built stakes while pursuing activist campaigns rose noticeably.
Some in the industry have raised questions about Align Partners’ dividend structure. One industry official said, “Align Partners is unlisted and effectively a private company, so it’s hard to call it a problem that one controlling shareholder takes a high dividend,” but added, “It is worth thinking about the fact that results created by demanding higher dividends and greater shareholder value from companies ultimately concentrate in the hands of the asset manager’s controlling shareholder.”
* This article has been translated by AI.
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