[Exclusive] Farallon, the US Firm That Shook Toshiba, Eyes Activist Push in Korea

60 Trillion Won in Assets Under Management, Deploying Multiple Strategies
Potential for Activist Approach in Korea
Viewing Changes in Korea’s Capital Market, Including Commercial Act Revisions, as an Opportunity

US-based global alternative investment manager, is considering entering the Korean market. While the firm manages multiple strategies including credit, equity long/short, real estate, and strategic capital investments, there is speculation that, in Korea, it may pursue activist strategies targeting improvements in the governance structures of listed companies and changes in capital allocation.

According to the investment banking (IB) industry on September 11, Farallon is currently seeking local talent as part of its push to enter the Korean market. It is reportedly engaging with professionals who possess a deep understanding of the Korean market and who have experience in corporate governance reform and value enhancement work from private equity (PE) firms as well as IB backgrounds.

Farallon, established in 1986 by Tom Steyer, is based in San Francisco, United States. After leaving the company in 2012, Steyer turned to climate and political activism, and this year ran in the California governor’s race. Currently, Farallon operates offices in San Francisco, Hong Kong, London, Singapore, and Tokyo. Rather than being a traditional buyout PE firm, Farallon is better described as a multi-strategy hedge fund, deploying strategies spanning bonds, equities, merger arbitrage, real estate, and more, across asset classes worldwide.

Attention is being paid to Farallon's move toward Korea because of its track record in Japan. In that market, Farallon engaged in active shareholder involvement during Japan’s corporate governance reform phase. Rather than passively waiting for share prices to rise, it made its presence known as an activist investor, pressuring companies to review governance structures, capital allocation, and business strategy.

Toshiba is a representative example. Farallon was the third-largest shareholder in Toshiba with over a 6% stake, and opposed the proposed company split, demanding a broader review of buyout proposals from private equity funds. At the time, Farallon criticized Toshiba for pushing forward the split without sufficiently reviewing alternative sale proposals.

Farallon appears to regard changes in Korea’s capital market—such as the revision of the Commercial Act and the enactment of laws to prevent stock price suppression—as an opportunity. Its current focus on professionals with PE backgrounds is not unrelated to this. While activist and PE investing may seem different on the surface, both approaches aim to enhance corporate value. In PE, firms directly implement changes such as selling non-core assets, improving cost structures, reallocating capital, and overhauling governance after obtaining management control. Activist funds, on the other hand, use minority stakes in combination with the board, shareholders’ meetings, and open letters to exert pressure for similar changes.

A PE industry insider commented, “What PE professionals do at the end of the day is also about improving corporate governance and addressing inefficiencies. The only difference is whether you gain control or apply pressure as a minority shareholder, but the fundamental goal of improving corporate value is shared with activism.”

This content was produced with the assistance of AI translation services.