White Box Advisors (hereinafter referred to as White Box), which opposed the division of LG Group, is an activist fund located in Minnesota, USA. Since its establishment in 1999, Whitebox has mainly invested in companies in the US, Latin America, and Asia. It has offices in London, UK and Sydney, Australia. Whitebox made its name public in Korea by officially expressing its opposition to the division of LG Group.
Former CEO of Andy Redleaf Whitebox (left) and current CEO of Mark Strepling Whitebox (Photo = LinkedIn, etc.)
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Whitebox is an investment company founded by Andy Redleaf. As Andy Redleaf left the Whitebox last year due to personal circumstances, Mark Strefling is alone as CEO. He studied Accounting at St. Thomas University, followed by MBA at the University of Kraton Law School and the University of Minnesota.
Andy Redleaf, the founder, is a well-known figure in the hedge fund industry. He founded Deep Heaven Capital Management in 1994, and co-founded White Box in 1999. He predicted the 2008 subprime mortgage crisis (a financial crisis caused by the US real estate bubble).
Whitebox has seen a significant increase in its assets over the past few years. In 2013, the size of the managed assets of Whitebox was $2 billion (KRW 2,186 trillion), but the scale has grown to $6 billion (6.6 trillion won). Whitebox has expanded its presence in overseas capital markets such as the US.
American activist fund white box advisors CI. (Source = white box)
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Whitebox officially opposed the division of affiliates (LG Hausys, LG MMA, Pantos, and LG International), which the LG Group decided at the board meeting in November. Recently, Whitebox sent a letter to LG Corp. stating that “LG Group made a negative decision on shareholder value for the succession of the family’s management”. Whitebox owned about 1% of LG Corp.’s shares for the past three years.
Whitebox got the attention of the domestic business community as it opposed LG Group’s restructuring of governance.
Whitebox also opposed the agenda for bankruptcy approval of the US Pioneer Energy Service (Pioneer) in April. Whitebox holds Pioneer’s $200 million (218.8 billion won) bonds along with Credit Swiss Asset Management.
Whitebox also abstained from the agenda for a merger with Dell in the United States in 2013. In 2013, American investment firm Silver Lake acquired Dell in collaboration with its founder Michael Dell.
This is the first time that Whitebox interfered with the management of Asian companies.
Last year, Whitebox was also criticized as’Shadow Bank’. Shadow banks, such as investment banks and hedge funds, play a similar role to banks, but are not regulated by central banks. They create liquidity by buying and selling high-yield, high-risk bonds. However, the structure of the investment target was complicated and not revealed, so it was nicknamed Shadow Bank.
It was pointed out that Whitebox was a shadow bank when it was known that it lent about 200 million dollars (218.8 billion won) to US firearms company Remington last year. Remington’s firearms sales declined as its firearms were used in a firearms accident at Sandy Hook Elementary School in the United States in 2012. It went bankrupt in 2017.
The fact that the white box is being used as Remington’s’shadow bank’ has created negative public opinion in the United States. Reuters criticized, “Hedge funds are being used as banks for companies that are difficult to find financial institutions.”
As such, the controversy is expected to continue as the white box rebelled against domestic corporate governance reform.
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