Monaco, Monte Carlo.
In a luxurious office with a dazzling view of the deep blue sea stretching out beyond the window, four middle-aged men sat across from each other on opposite sides of a sofa.
They were none other than the Mervaz brothers—co-founders and major shareholders of Sovereign, a Monaco-based asset management firm of New Zealand origin—along with Enzo, the COO, and Emil, the head of the investment division.
Luca Mervaz, a slender man with striking brown eyes, set down his gold-rimmed teacup on the table and spoke.
"What was it you said? That you found a promising investment opportunity in Asia—was it in China?"
Emil, wearing a silk tie, met his gaze and answered calmly.
"It's not China. It's a Korean company."
"Korea?"
"That's correct."
Luca Mervaz crossed his arms and furrowed his brow, clearly puzzled.
The Mervaz brothers had originally co-managed a clothing and daily goods distribution company they inherited from their father in Hamilton, in northern New Zealand. However, believing that they could never make truly big money from it, they boldly shut down the family business and established an asset management firm instead.
After purchasing real estate in Hong Kong and generating substantial profits by redeveloping and reselling it, the Mervaz brothers rapidly expanded their assets. They focused their investments primarily on emerging markets, including Asia, South America, and Russia.
Their investment strategy targeted companies with weak corporate governance—those whose stock prices were undervalued relative to their actual performance, often due to management corruption or other issues.
Once they secured a certain level of ownership, they would attempt to seize management control under the pretext of normalizing operations and increasing shareholder value.
While their stated justification sounded reasonable, their true objective was hidden behind it: to maximize profits by selling off valuable assets and draining the company's cash through dividends.
As a result, most of the companies they acquired were either broken up and sold in pieces or stripped of all profits through dividends, leaving behind empty shells that were then pushed back onto the market.
"It's a company called ST Group."
Unlike his older brother, Matteo Mervaz—slightly plump with curly hair—tilted his head in puzzlement.
"I've never heard of it."
Emil immediately began explaining in detail.
"It's a chaebol group ranked third in South Korea, with over 23 billion dollars in assets, and numerous affiliates across telecommunications, oil refining, construction, and securities."
"Did you say 23 billion dollars in assets? That seems a bit too large for us to meddle with."
At Matteo's reaction, Emil responded calmly.
"Under normal circumstances, yes."
Leaning back into the plush leather sofa, Luca narrowed his eyes and asked—
"It sounds like you're saying there's an opening for us to dig into. Am I understanding that correctly?"
"That's correct. If you look at ST Group's governance structure, the various affiliates I mentioned earlier are all tied together under a holding company called ST Corporation."
Since most Asian chaebol groups had similar structures—where the owner family controlled the entire group—the Mervaz brothers and COO Enzo listened with calm expressions.
"Chairman Moon Byung-kwon, the owner, holds less than 1% of ST Corporation's shares. Instead, control over the holding company and the entire group is exercised through a company called ST C&C, in which the owner family holds a 59.5% stake."
Emil continued his explanation in a subtle tone, looking at the Mervaz brothers seated across from him.
"However, ST C&C holds only 8.6% of the holding company's shares."
Hearing this, Matteo frowned and asked—
"Not 86%, but only 8.6%?"
"That's correct."
Matteo let out a disbelieving chuckle.
"I knew that the governance structures of Korean chaebol groups were quite distorted, but this is on another level."
"Indeed."
Luca, his older brother, nodded as if he felt the same way.
"Even the shares they did hold were recently affected—illegal transactions, including a backdoor deal with JPMorgan, were uncovered, and 0.6% of improperly acquired shares were restored to their original state. As a result, ST C&C's stake in the holding company has been reduced further to 8%."
"…..!"
"With that, even if you combine Chairman Moon Byung-kwon's personal shares with all friendly stakes, it still doesn't reach 13%."
As the Mervaz brothers' eyes lit up simultaneously and they straightened their posture, Emil smiled meaningfully.
"To put it generously, if we secure just 15% of the holding company, ST Corporation, we can take full control of ST Group, which holds assets worth 23 billion dollars."
Luca, clearly intrigued, asked,
"The question is how much capital it would take to accumulate that 15% stake."
Emil met his gaze directly and replied,
"During the emergence of the owner's legal risks, massive accounting fraud was uncovered by the authorities. As a result, the stock price has continued to plunge, and the holding company's market capitalization has fallen below 1 billion dollars."
Luca's eyes widened as he leaned forward and said—
"One billion dollars? Then, simply put, does that mean we could take control of a 23-billion-dollar conglomerate by investing just 150 million dollars?"
Emil nodded with a faint smile.
"That's exactly right."
"…Now that's very interesting."
Luca let out a low chuckle, his face tinged with greed.
At that moment, Enzo, the COO—who had been quietly listening until now—slowly began to speak.
"After hearing Emil's explanation, I looked into it myself. It turns out ST Corporation holds several highly valuable affiliates, including Korea's largest mobile carrier, a chemical company that monopolizes the domestic propylene oxide (PO) market, and a natural gas supplier with a 25% market share. If we break these up and sell them off one by one, the gains from the equity alone would not only recover our initial investment but could yield returns of at least ten times that amount."
Enzo continued speaking with a confident tone.
"On top of that, ST Corporation—the holding company—is not merely holding shares in its affiliates. It is also the largest oil refining company in Korea. Considering that, the returns we could generate after securing management control would be enormous."
However, true to his background as an accountant, Luca remained cautious.
"If accounting fraud has been uncovered, doesn't that also mean the company is burdened with a significant amount of debt?"
"As of the end of last year, ST Corporation's total assets stand at approximately 8 billion dollars, with liabilities around 5 billion dollars. So even if we assume that all debts are repaid and even contingent claims arising from the accounting fraud are fully written off and the company is liquidated, there would still be at least 2 billion dollars in cash remaining."
At this, Matteo leaned forward in his seat.
"So even excluding any control premium on the affiliates' shares, simply liquidating the company would allow us to recover at least twice our initial investment."
Emil nodded.
"That's right. Of course, if we secure management control, the value of ST Group would be far greater than that."
"Hmm…"
Luca tapped the armrest of the sofa lightly with his fingertips, his eyes gleaming.
"Even if we don't completely seize control, we could still provoke a dispute, drive the stock price up significantly, and then offload our shares through a block deal. That alone would yield solid profits."
Matteo also curled his lips into a sly smile.
"Either way, it sounds like a bet where we can't lose."
"Agreed."
Luca gave a small nod.
"It's no different from a lump of gold lying on the street. We'd be fools to just walk past it."
He turned his gaze toward Emil, who was seated across from him.
"If we hesitate, someone else might snatch it first. Let's get to work immediately."
"I anticipated that, so Enzo and I have already drafted a rough plan."
As if he had been waiting for this moment, Emil handed over a slim folder he had prepared in advance.
Luca took the documents, quickly scanned through them, then passed them to his younger brother with a satisfied expression.
Matteo also reviewed the contents and gave a slight nod.
"Not a bad plan."
"Good. Then let's proceed with this."
At Luca's swift decision, Emil responded with visible enthusiasm.
"Understood."
Leaning back once more, Luca let out a low chuckle, his face filled with anticipation.
"ST Group… to think we've stumbled upon such unexpected prey."
Matteo, his younger brother, added with a greedy smile from beside him,
"Seriously. And it's a well-fattened stag too—this hunt should be quite enjoyable."
***
The next day.
After finishing his signature in elegant handwriting, Seok-won set down his fountain pen.
"Proceed with it as is."
"Yes, sir."
Na Seong-mi, who had been standing in front of the desk, received the approval folder and bowed her head.
A moment later, as the door closed and he was left alone, Seok-won picked up his cup and took a sip of coffee.
It had cooled slightly, but the subtle hazelnut aroma pleasantly tickled his nose.
Just as he was about to check the international oil prices and the Nikkei index displayed on his monitor, his phone suddenly began to vibrate with a low buzz.
Seeing the number on the screen, Seok-won's eyes sharpened with interest, and he immediately answered the call.
"What is it?"
At that moment, the familiar voice of Lee Cheol-gyun came through the phone.
[Just now, Chairman Moon Byung-kwon has agreed to provide all of his holdings in ST Group affiliates as collateral for the personal guarantee tied to the ST Global loan, as requested by the creditor group.]
"So it's come to that in the end."
Since it was something he had already anticipated, Seok-won showed no sign of surprise and remained calm.
[Considering he is currently under arrest on charges of accounting fraud and breach of trust, it seems that with all his shares effectively handed over to the creditor group as collateral, he has become little more than a symbolic owner. There's also a strong possibility that the management vacuum at ST Group could be prolonged.]
Although he knew that the issue was not merely a management vacuum but that the entire group was at risk of being taken over, Seok-won chose not to voice it aloud.
[With many of the group's key executives either arrested alongside Chairman Moon or under investigation by the prosecution, the affiliates will have no choice but to operate independently for the time being. There are even rumors circulating in Yeouido that it could be broken up into one or two smaller corporate groups, like Hyundai Group.]
Not only had its ethical standing been severely damaged, but with the possibility of a prison sentence in the upcoming trial—and, above all, the likelihood of shareholders filing lawsuits for damages—it would be difficult for Chairman Moon Byung-kwon to maintain control of management.
[Once news of the share collateral provision is made public, ST Group's stock price will likely plunge again.]
"With the owner risk not stabilizing but instead worsening, that's only natural."
Seok-won said this as he adjusted his grip on the phone in his hand.
"Let me know immediately if there are any new developments."
[Understood.]
After ending the call, Seok-won moved his mouse and brought up the stock charts for ST Corporation and ST Telecom side by side on the monitor to his left.
The stock prices were continuing their downward trend today as well.
ST Corporation, in particular, had finally broken below the 10,000 won mark and had already fallen to a precarious level, hovering just above 8,000 won per share.
"At this rate, it'll drop to 6,000 won just like I remember from before the regression."
Sure enough, as news began to spread in the market that Chairman Moon Byung-kwon had pledged all of his shares as collateral to the creditor group, the stock prices of both companies—which had been declining gradually—suddenly plunged, sharply widening their losses.
Resting his chin on his hand, Seok-won watched the movement before muttering quietly,
"It's about time Sovereign starts making its move."
A sharp glint flashed in his eyes as he stared at the stock chart.
TL/n -
In 2003, Sovereign Asset Management, through its subsidiary Crest Securities, acquired nearly 15% of SK Corporation, the flagship company of South Korea's SK Group. This was one of the most high-profile cases of foreign activist investment in Korea at the time.