Chair Do Yong-hwan of STIC Investments will hand over 11.4% equity to U.S. activist fund Milliken Capital. Only 2% of Do's equity will remain, and Milliken Capital will become STIC's new largest shareholder.
According to the investment bank (IB) industry on the 20th, Do on this day signed a contract to sell 4,769,600 shares (11.44%) for 60.09696 billion won. A unit price of 12,600 won per share was applied.
Do's equity stake in STIC Investments will drop sharply from 13.44% to 2%. The combined equity of the largest shareholder and special related parties will fall from 19.1% to 7.66%.
STIC said, "This transaction is in line with Chair Do's publicly promised retirement plan, and is part of a responsible preparation process to lay the foundation for STIC to continue growing under a stable management structure while maintaining a consistent fund management philosophy and identity after the retirement."
STIC's position is that while preparing for retirement, Do has been seeking a new largest shareholder who could help the firm achieve greater growth as a long‑trusted manager.
A STIC official added, "Do has maintained ongoing exchanges with Milliken Capital and discussed growth plans," and "through lengthy talks, the two sides confirmed alignment on investment philosophy, operating principles and views on governance, and by welcoming Milliken Capital as a major shareholder, they became confident that existing weaknesses would be resolved and a stable, responsible governance system would be established."
STIC emphasized that even after the change in the largest shareholder, fund management, decision‑making structure, investment committee (IC) operations, and key management personnel and organizational structure will remain intact. It added that the management and board systems would also be maintained.
Align Partners, a domestic activist fund that has publicly pressed STIC's management, including Do, for value‑up measures, is said not to have been informed of this in advance.
However, Align said for now, "Given Milliken Capital's past track record, we expect it could become a good major shareholder that supports STIC's management while backing sustainable enhancement of shareholder value," adding, "We will have to watch, but we view it with positive expectations."
As Do hands over his equity to Milliken Capital, Milliken Capital is expected to become STIC's sole largest shareholder after approval of the business combination by the Korea Fair Trade Commission. Adding the existing 13.52% equity it holds to the additional 11.44% to be acquired from Do brings its total to 24.96%.
Align holds 7.63%, and Petra Asset Management holds 5.09%. Even if Align and Petra join forces, their combined equity would be 12.72%, about half of Milliken Capital's stake.
Milliken Capital and Do, and Align, still may compete to win the votes of minority shareholders for a proxy battle at the regular shareholders meeting in Mar. The minority shareholders' equity ratio was 42.7% as of the end of the third quarter last year.
Reflecting these expectations in advance, STIC's share price surged on the day. It closed at 10,060 won, up 10.2% from the previous trading day. At one point in the morning, it rose to 11,160 won.