Korea's first chaebol proxy war: KCGI lost the board but won a 100% stake yield

In November 2018, Korean fund KCGI bought its first Hanjin KAL shares — the first time a domestic private-equity fund had openly contested a chaebol family's control. Hanjin KAL is the holding company of Korean Air, and the fight was with the Cho family: KCGI allied with Walter Cho's sister Heather Cho and Bando Group, and by the March 2020 annual meeting the alliance was the single largest shareholder block.

The showdown came on March 27, 2020. Shareholders voted roughly 57% to keep Walter Cho as a director; the alliance's candidate Kim Shin-bae took about 48%, short of a majority. Delta Air Lines, raised from 10% to 14.9% as the family's white knight, and Walter Cho's own 6.5% made the difference. All seven alliance board candidates were voted down, and Hanjin KAL shares still closed up 29.9% on the drama.

The defeated alliance did not fold. After the family-backed holding company issued ₩300bn of bonds with 3.63 million detachable warrants in July 2020, KCGI and Bando ran a public tender for 1.2 million of those warrants at a 42.8% premium, lifting their combined stake to 45.23% versus 43.83% for the Cho camp. The family answered with capital: state-run KDB took a roughly 10.66% Hanjin KAL stake while funding Korean Air's Asiana acquisition, and a Seoul court rejected KCGI's injunction against the placement.

The endgame came in 2021–2022: the three-party alliance disbanded in April 2021 after the KDB-backed share sale tipped the balance, and in March 2022 KCGI agreed to sell its entire 17.41% stake to Hoban Construction for an estimated ₩690.4bn (about $562.7m) — exiting a losing boardroom war with a profitable round trip.

The Cho family kept control — about 57% of AGM votes — while KCGI grew its alliance to 45.23% via a warrants tender and later sold its 17.41% stake for about ₩690.4bn

The family's maths was better at the AGM: Delta's upgraded stake plus the chairman's own shares turned a logo-vote into a ~57/48 split in the family's favour.

Capital beat governance: once KDB took a stake while financing the Asiana deal, the alliance's share-power was diluted by a state-backed player no court injunctions could unwind.

The warrants tender was KCGI's best executed move — a market-price raid that raised the alliance to 45% — but it came after the AGM, when control was already decided.

The round trip worked financially only because Korean Air's crisis-era discount and the Asiana-driven upside inflated what a constructor like Hoban would pay for a contested 17.4% stake.

A minority coalition can contest a family conglomerate's control, but it loses if the state-linked bank shows up on the other side — so the fight must be won before the capital, not after

Hanjin KAL and Korean Air stayed under the Cho family, now anchored by KDB's stake and the Asiana consolidation that followed. KCGI's campaign ended with its exit to Hoban Construction in March 2022, but the episode permanently changed Korean corporate governance: after the country's first chaebol proxy war, Korean boards began pre-empting minority challenges with better returns and clearer capital structures.