U.K.-based activist fund Palliser Capital said LG CHEM's stock is severely undervalued and presented recommendations to boost shareholder value. Palliser Capital holds more than 1% equity in LG CHEM.
According to the investment banking (IB) industry on the 22nd, Palliser Capital announced measures on the 21st (local time) at the "2025 Active and Passive Investor Summit" in New York to help LG CHEM management realize more than 100% upside potential from the current share price. On the news, LG CHEM rose to 385,000 won, hitting a 1-year high.
Palliser Capital stressed the need to improve the board's composition and revamp executive compensation to align with shareholder interests; implement a strong, return-focused capital allocation framework; conduct share buybacks by using the company's equity stake in LG Energy Solution; and roll out an open-ended, long-term discount management program.
James Smith, founder and CIO (chief investment officer) of Palliser, said, "LG CHEM's current market capitalization reaches $14.0 billion (about 20 trillion won), but its intrinsic value is $53.0 billion (about 76 trillion won), showing a large gap," and noted, "This stems from a lack of trust in LG CHEM's corporate governance, misalignment with shareholders, and poor capital allocation."
He added, "The current directors are academics who lack managerial expertise and capital allocation experience," and said, "Investors are overlooking LG CHEM's strong battery business and viewing it only as a struggling petrochemical company, so the stock is trading at a discounted price."
According to Palliser Capital, LG CHEM shares are trading at a 74% discount to NAV (net asset value), the worst level among large domestic conglomerates. It pointed to an ongoing value discount of about 69 trillion won.
Palliser Capital is an activist hedge fund headquartered in London. It was founded in 2021 around James Smith, who worked at Elliott for more than 20 years. Palliser Capital previously urged Samsung C&T and SK Square to enhance shareholder value.