British activist fund takes aim at SK to unlock value

SK Square's headquarters in central Seoul (SK Square)

London-based activist investor Palliser Capital is on its way to challenge South Korean chip-to-energy conglomerate SK Group, having secured a stake of over 1 percent in its investment arm SK Square.

Having built a stake in SK Square over the past two years, the British activist fund is pushing for changes in the company to improve its market valuation, according to a report from the Wall Street Journal.

Though SK Square is the holding company of the group’s key chip-making affiliate SK hynix, with around 20 percent stake in the company worth roughly $20 billion, its market capitalization is much lower, standing at around $8.5 billion.

Palliser Capital urged the Korean firm to expand investment and increase its buyback of treasury stock to boost the company's valuation, according to the report.

The report comes over a month after SK Square pledged to execute structural adjustments of its investments to concentrate on the chip industry under the leadership of its new Chief Executive Officer Han Myung-jin, who took office in August. Its parent company SK Group has been executing a massive reshuffle across its affiliates to enhance business efficiency.

Other major investors in SK Square include advisory firm Macquarie Investment Management Business Trust with a 6.83 percent stake, Korea's National Pension Service holding 6.67 percent, and Norway’s central bank Norges Bank at 5.27 percent.

Palliser Capital was founded in 2021 by its Chief Investment Officer James Smith. Prior to launching the company, Smith worked for 20 years at Elliott Investment Management, which is known for its activism campaign launched against Samsung C&T, the de facto holding company of Samsung Group.

In recent years, Palliser Capital has been calling for change at Samsung C&T, urging the company to make efforts to raise its lukewarm share price. It is known to hold a 0.62 percent stake in Samsung C&T.

Earlier this year, a group of foreign activist funds urged Samsung C&T to raise its dividend payouts. Though not included in the group, Palliser supported the proposal. The proposal was eventually voted down by Samsung C&T shareholders at a meeting held in March.