Align Partners has expanded its stake in Coway (021240) to over 5% through continued investment and formally declared its intent to influence management. The activist investor first invested in Coway during the first half of 2024, making this development come roughly two years later. Align Partners has submitted a shareholder proposal to nominate independent directors at Coway's shareholder meeting scheduled for March 31. Analysts interpret this as a move to strengthen its presence as a major shareholder and rally support from retail investors.
According to the Financial Supervisory Service's electronic disclosure system on March 14, Align Partners has secured a 5.07% stake in Coway through multiple open-market purchases. The firm holds 3,590,395 shares, valued at 264.2 billion won based on the March 13 closing price. This represents the largest single-stock investment Align Partners has ever made.
As of February 24, Align Partners held 3,145,241 shares, representing a 4.37% stake. The firm purchased more than 400,000 additional shares in approximately 10 days. Regarding the stake increase, Align Partners stated there was "no particular reason," explaining it as "a natural increase in stake following the expansion of fund assets under management."
Following this additional purchase, Align Partners filed a disclosure confirming its stake exceeded 5% and stated its purpose as "influencing management." While Align Partners had previously shown intent to engage in management through shareholder proposals nominating independent directors, this marks the first official declaration of such intent.
The additional stake purchase does not directly change Align's legal rights as a shareholder. The firm already held over 3%, securing key minority shareholder rights including the right to make shareholder proposals and convene extraordinary shareholder meetings. Nevertheless, increasing its stake above 5% ahead of the March shareholder meeting appears aimed at cementing its presence as a bona fide major shareholder, beyond simply adding shares due to fund growth. Going forward, any purchase or sale of shares by Align Partners will trigger disclosure requirements, and the firm will be listed as a major shareholder with over 5% in Coway's quarterly reports.
Align Partners previously nominated Park Yu-kyung, former head of emerging markets at APG Asset Management, and Shim Jae-hyung, former CEO of Zinus, as independent director candidates through its shareholder proposal. Coway's board has clearly expressed opposition to Align's nominees, setting up a proxy battle at the shareholder meeting. The board assessed that Park lacks accounting and financial expertise compared to its own nominees. For Shim, the board cited concerns about potential breach of corporate confidentiality, as he was nominated without a cooling-off period after serving as president of a competitor.
On March 13, Coway also responded to Align Partners' third shareholder letter, effectively rejecting most of the activist investor's demands. In the letter dated February 13, Align Partners reiterated its call for Coway board chairman Bang Jun-hyuk to resign from the chairmanship due to conflicts of interest with Netmarble (251270), and requested explanation of mid-to-long-term valuation and return on equity (ROE) improvement targets.
In its response, Coway stated, "Director Bang Jun-hyuk has faithfully performed his duties as board chairman and contributed to restoring the company's competitiveness." The company added, "We cannot change individual executives' positions and roles or provide detailed information simply based on demands from certain shareholders." Coway further noted, "While utilizing low-cost debt capital as requested could improve ROE and shareholder returns in the short term, we determined this would likely undermine the company's long-term competitiveness and diminish our capacity to maintain predictable and sustainable high levels of shareholder returns."