Established in July, 2018 KCGI is an independent asset manager in Korea focused on increasing corporate value. We believe that corporate value in Korea can be raised through ESG, smooth business succession and improvement in corporate governance.
In the very first month of company establishment we successfully raised and started managing a KRW 160 bn blind pool fund. In addition, we developed various investment opportunities for the purpose of improving in corporate governance and business succession through a project specific fund, etc. As of the end of 2019, the equity value of the investment target companies’ shares owned by KCGI exceeded approximately KRW 600 bn.
Our investments will not be limited by industry, investment amount, or investment structure. As the company name states we have a mission to contribute to Korea Corporate Governance Improvement through our investments. We will strive to maximize returns on investment for our investors as well as contributing to the sustainable development of our investee companies.
Korean companies are undervalued based on commonly used equity valuation measures. Compared to US companies the discount level is 63% based on P/E Ratio and 27% based on P/B Ratio.
The so-called 'Korea Discount' phenomenon is due to the lowest dividend payout ratio in the world and the poor governance structure. This is epitomized by Tunneling (favoring private family companies over listed companies), Propping (giving subsidies to affiliates), and Expropriation (siphoning off listed companies’ profits for controlling shareholders’ personal gain).
We believe that the Korea Discount can be eliminated through (a) management efficiency, (b) management transparency, (c) investments for long-term growth, and (d) shareholder-oriented management.
When the Korea Discount is eliminated and dividends are raised Korea could experience renewed growth. As the 10 million small individual investors benefit from increased dividends as well as new job creation the domestic economy would enjoy a true income-led growth.
CEO SUNG BOO KANG
KCGI PHILOSOPHY & MISSION
Korean culture-maker: Pioneer on a mission to improve corporate governance in a “Korean way”
- KCGI wishes to contribute to the establishment of a proper corporate governance culture in Korea. We have learned from the experience of foreign activist funds who sometimes overlooked Korea’s unique culture and norms. We will carefully blend the global best practices with our on-the-ground knowledge of the relevant legal and market environment.
Cohesive sentinel: Promoter of overall shareholder welfare through checks and balances rather than fighting over corporate control
- KCGI aims to bring a balance of power between controlling and minority shareholders of our investee companies. KCGI would like to see a fair distribution of benefits among shareholders
Growth helper: Advisor/helper working together with investee companies on long-term growth strategies
- KCGI would like to act as a management consultant, advisor and helper to investee companies. In particular KCGI would like to contribute to the formulation of their long-term growth strategies. We will remain humble and constantly learn from global best practices.
Investment partner: Companion/partner for investee companies’ sustainable development
- KCGI, as a long-term investor, aims to maximize investment returns as our investee companies increase their enterprise value and engage in sound and sustainable management.
Governance improvement strategy
- Value destruction by controlling shareholders →governance improvement and synergy creation→ maximization of enterprise value
- Buy out the controlling shareholder or engage actively as a second or third largest shareholder.
- Invest in companies that are facing succession issues. KCGI can help engineer various investment structures as well as create synergies by bringing in strategic investors.
- KCGI can also advise on succession planning and provide the required financing.
ESG responsible investment strategy
- Invest in companies or industries with high ESG scores or improving ESG scores. As a long-term investor KCGI can be flexible in their investment decisions. This allows KCGI to consider many investment factors besides financial performance