Activist investor Elliott set sights on Asia's family-run firms

Thu Jun 18, 2015 9:31pm EDT
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By Denny Thomas and Svea Herbst-Bayliss

HONG KONG/NEW YORK (Reuters) - U.S. billionaire Paul Singer appears to have paved the way for activist investors to fight for shareholders' rights where few hedge funds have ventured: Asia's biggest family-run firms.

In the past few months, Singer's $26 billion firm Elliott Management has taken on South Korea's Lee family, founders of the Samsung Group [SAGR.UL], as well as the Li family, which founded Hong Kong's third-largest lender Bank of East Asia Ltd (BEA) (0023.HK: Quote).

While Asian firms including Japan's Sony Corp (6758.T: Quote) and robot maker Fanuc Corp (6954.T: Quote) have faced off with activist investors such as Daniel Loeb of Third Point, the region's family-owned conglomerates have so far been largely left alone.

The opacity of some family-owned businesses, however, and the more lax corporate governance standards across Asia have made them attractive targets for hedge funds seeking fresh investment.

"Shareholder activism is going to be an increasing theme in Asia as more Asian companies access Western capital markets," said Singapore-based John Chessher, CEO of Cenkos Securities, an independent securities firm. "These kind of cases hopefully will bring about greater transparency."

Elliott did not respond to Reuters requests for comment for this story.

In a rare instance of shareholder activism in South Korea, the fund is in the process of trying to block an $8 billion proposed merger of two Samsung Group companies.

Elliott says the all-stock takeover offer by Samsung's de facto holding firm Cheil Industries Inc (028260.KS: Quote) undervalues sister firm and builder Samsung C&T Corp 000830.KS, and has filed a court injunction and lobbied shareholders to reject it.   Continued...

Paul Singer, founder, CEO, and co-chief investment officer for Elliott Management Corporation, attends the Skybridge Alternatives (SALT) Conference in Las Vegas, Nevada May 9, 2012.  . REUTERS/Steve Marcus