US Asset Management Firm Rises to 4th Largest Shareholder of LIG Nex1 in One Swoop, Will They Engage in Shareholder Activism?

[Korea Financial Times, Shin Haeju] Artisan Partners Limited Partnership (APLP), a US asset management firm, has been continuously purchasing shares of the domestic defense company LIG Nex1 (CEO Shin Ik-hyun) since the beginning of this year. In just one month, they acquired over 3% additional stake, securing 7% ownership and swiftly rising to become the 4th largest shareholder.

APLP had secured a 5.02% stake in LIG Nex1 in September 2024, but after repeated buying and selling, they reduced their stake to 3.89% by late November. However, they have resumed additional purchases this year.

Regarding this, APLP has stated that their investment purpose in LIG Nex1 is "simple investment." Currently, LIG Nex1 is the only company APLP has invested in on the domestic securities market.
Some in the business community are suggesting the possibility of APLP making a shareholder proposal at the upcoming LIG Nex1 shareholders' meeting on the 31st, citing past cases of active management intervention in companies where they held stakes.

APLP recently increased their stake in LIG Nex1 from 5.01% to 7.10%. From January 22 to February 21, they conducted a total of 15 share transactions, purchasing a total of 2.09% stake in the market, except for one instance. On February 17, they sold 3,850 shares. With this, they surpassed the previous 4th largest shareholder, the Government of Singapore, and are now only 0.28% behind the 3rd largest shareholder, GIC Private Limited.

According to Article 147 of the Capital Markets Act, holding 5% or more of a listed company's shares classifies one as a "major shareholder." APLP became a major shareholder of LIG Nex1 shares from January this year. On January 15, APLP purchased 1,061,530 shares of LIG Nex1, and the next day, on the 16th, they additionally purchased 39,709 shares, exceeding the 5% stake.


Generally, a limited partnership means providing investment without participating in management activities. Simple investment also implies no intention to influence management rights, with the main purpose being simple voting rights exercise and profit realization.
However, in the case of APLP, as a shareholder of Seven & i Holdings, the holding company of the convenience store chain 7-Eleven in Japan, they urged Seven & i Holdings to actively participate in acquisition negotiations proposed by the Canadian retailer Alimentation Couche-Tard (ACT), judging that Seven & i Holdings' restructuring plan to sell its supermarket business was insufficient.

Currently, the agenda for the LIG Nex1 shareholders' meeting includes the re-appointment of three existing outside directors and the appointment of one new outside director.

There is also an agenda to change the business purpose. They plan to delete the role as a "general partner (GP) of an institutional private equity fund" and add "processing, assembly, regeneration, modification, maintenance, and improvement" to the existing "manufacturing and sales of communication, electronic, electrical, mechanical equipment for ships and naval vessels" to specify the maintenance, repair, and overhaul (MRO) business.

A LIG Nex1 official said, "It is difficult to disclose the shareholder letters submitted to this shareholders' meeting."
Meanwhile, LIG Nex1, which recorded consolidated sales of KRW 3.2771 trillion and operating profit of KRW 230.8 billion last year, will pay a cash dividend of KRW 2,400 per share as a settlement dividend. The dividend yield is 1.15%, and the total dividend amount is KRW 52.3 billion. The dividend record date is December 31, 2024.

Shin Haeju (hjs0509@fntimes.com)