An activist investor has reportedly bought a stake in Korean tobacco company KT&G (OTCPK:KTCIF) and is pushing for the company to improve, including divesting its ginseng business.
Flashlight Capital Partners, which was founded by Carlyle Group’s former Korea chief calls for spin-off of ginseng business, divesting of non-core assets and adding new directors to KT&G’s board, according to letter seen by Seeking Alpha .
“While we believe the company has extremely valuable assets and an impressive market share, we believe that adopting meaningful environmental, social and governance (“ESG”) improvements and adding new perspectives to the Board of Directors (the “Board”) can help KT&G close its meaningful 50% business discount and deliver increased value to all stakeholders,” wrote Sanghyun Lee, Managing Partner of Flashlight Capital, in the letter. .
Flashlight Capital said it had private discussions with KT&G management over the past six months and believes its recommendations could lead to a 100% upside over the next year and 5x over the next five years.
Flashlight has reportedly built a 1% stake in KT&G, according to a report from the WSJ, which reported the news earlier Thursday.
While KT&G shares are up 13% in Korea this year, it is trading at the same price as 15 years ago and at a “steep” discount to its peer, according to the letter.