Mizuho sees 'urgency' as Japan Inc scurries to bolster capital in line with TSE
04/12/2023 08:00
By Makiko Yamazaki and Ritsuko Shimizu
TOKYO, Dec 4 (Reuters) - The Tokyo stock bourse's rare
call for better capital efficiency has made Japanese companies
scrambling to compile action plans to avoid being seen as
laggards, the chief of Mizuho Financial Group's 8411.T trust
banking unit told Reuters.
"There has been a sense of urgency brewing among companies"
ahead of January, when the Tokyo Stock Exchange (TSE) 8697.T
starts publishing a list of companies that have disclosed action
plans in line with its call to improve their use of capital, Kei
Umeda, CEO of Mizuho Trust & Banking, said in an interview.
The TSE's reform push has been hailed by investors as a
remedy to Japan's unusually high number of chronically
undervalued stocks, but only 20% of companies listed on the top
"prime" section disclosed specific measures as of July.
Mizuho Trust's corporate finance consulting service has seen
a surge in demand, having 60 to 100 client meetings every month
to discuss how to boost price-to-book ratios, Umeda said.
His comments show that the bourse's planned disclosure of
compliant companies has been creating "naming and shaming"
effects on laggards, where about half of listed firms are
trading below their book value.
Even though the TSE's call is not legally binding, many
companies "care hugely about what others in the same industry or
in the same region are doing", Umeda said, adding that they
don't want to be seen as lagging behind.
The TSE call has already sparked a slew of own share
buybacks, unwinding of cross-shareholdings and some management
buyouts (MBO) that take companies private to escape shareholder
pressure.
Japan has had 16 MBO announcements this year, with total
value of a record 1.19 trillion yen ($8.11 billion), including
Taisho Pharmaceutical Holdings' 4581.T $4.8 billion deal,
according to Recof Data.
"Costs associated with listing have come under more
scrutiny," as advantages of having the listing status in
financing have faded, Umeda said. "We are seeing a growing
number of companies choosing to go private as they prioritize
speed in decision making."
($1 = 146.8100 yen)
(Reporting by Makiko Yamazaki and Ritsuko Shimizu; Editing by
Rashmi Aich)
((Makiko.Yamazaki@thomsonreuters.com; +81-3-4563-2805;))