Activist Hedge Fund Targets Hyundai for Reforms

The Hong Kong affiliate of activist hedge fund Elliott Advisors Corp.’s says it has amassed more than $1 billion worth of shares in Hyundai Motor Group and plans to push the South Korean carmaker for reforms.

Elliott reports that it holds stakes in Hyundai Group’s Hyundai Mobis auto parts business and its Hyundai Motor and Kia Motors car companies. Each of the units holds equity in the other two.

Elliott Advisors is owned and headed by U.S. investor Paul Singer. Through Elliott, he has launched activist shareholder campaigns at more than 50 companies worldwide over the past five years alone.

Last month Hyundai Group’s founding Chung family announced an effort to simplify the conglomerate’s complicated corporate structure. The plan faces a shareholder vote on May 29.

Elliott praises the initiative as a “first step.” But it asks for details about how the group plans to “improve corporate governance, optimize balance sheets and enhance capital returns.” The fund adds that it looks forward to “engaging with management and other stakeholders directly on these issues.”

Last year Hyundai posted a net profit gain of 3% in October-December, its first year-on-year quarterly gain since 2013. Full-year net profits plunged 25% to an eight-year low, and the company predicts further declines this year.

The company has struggled in China because of political tensions and in North America over a product mix poorly matched to consumer demand.