(Reuters) – U.S. hedge fund Elliott Management on Tuesday renewed pressure on Hyundai Motor Group, calling on the South Korean company to return $10.6 billion (8.1 billion pounds) of cash to shareholders and consider selling non-core assets, including $10 billion of property.
The call came after Hyundai Motor <005380.KS> posted a sharp drop in third-quarter earnings in late October, tempering market expectations of better shareholder returns and an overhaul of its ownership.
In an open letter, Elliott called on Hyundai to return up to 8 trillion won ($7.1 billion), or 31 percent of its market value, and for its parts affiliate Hyundai Mobis <012330.KS> to return 4 trillion won, or 22 percent of its market capitalisation, to shareholders, preferably by share buybacks.
Elliott said Hyundai Motor Group, despite having “excess capital,” lagged behind peers such as General Motors and Toyota in shareholder returns, citing a report by consultancy Conway MacKenzie.
Elliott asked Hyundai to review its non-core assets, including the land it purchased in 2014 to build headquarters in the district of Gangnam in Seoul, “with an eye towards divesting assets that are either underutilised or contribute low returns.”
“Given the cost of delay and the lack of progress made thus far, Elliott also reserved the right to put forward the various recommendations as shareholder resolutions in the next general meetings,” it said.
In May, Hyundai Motor Group, backed by founding family members, shelved an ownership restructuring plan that would have given the son of its ageing chairman more control of the conglomerate, following opposition from Elliott.
In September, Elliott, run by billionaire Paul Singer, made a fresh proposal for Hyundai’s ownership structure and suggested adding new independent directors to its respective boards.
Elliott, which challenged Samsung Electronics <005930.KS> in 2016, called on Hyundai to join the South Korean electronics giant in diversifying its board, improving shareholder returns and addressing a complex shareholding structure.
“Hyundai Motor Group is now the only major corporate group in Korea with an unreformed legacy shareholder structure and no plan to address it,” Elliott said in a statement on Tuesday, saying the group’s “reform efforts have stalled.”
Hyundai Motor could not immediately be reached for comment.
In April, Elliott Management said it owned more than $1 billion worth of shares in three Hyundai group companies – Hyundai Motor Co <005380.KS>, Kia Motors Corp <000270.KS> and auto-parts maker Hyundai Mobis Co Ltd <012330.KS>.
(Reporting by Hyunjoo Jin in SEOUL, Sanjana Shivdas and Arunima Banerjee in Bengaluru; Additional reporting by Ju-min Park, Editing by Sai Sachin Ravikumar, Arun Koyyur and Mark Potter)