Activist investors say their voices are being heard by Japan Inc
29/03/2018 11:02
* Teikoku Sen-i shareholders reject proposals by Sparx Asset
* Sparx thinks its proposal led to dividend hike
* Oasis' proposals to GMO Internet win 90 pct of minority
votes
* ValueAct eyes Japan as activism gains momentum
By Tomo Uetake
TOKYO, March 29 (Reuters) - Activist investors in Japan may
be struggling to get companies to embrace their proposals but
are optimistic that management is warming to shareholder
activism that will likely shape more of Corporate Japan's
decision making.
Activist investment has been gaining momentum since Prime
Minister Shinzo Abe advocated strengthening corporate
governance, and the peak season of annual general meetings in
June could see more of such proactive shareholders attempt to
influence management.
Japanese asset manager Sparx Asset Management's 8739.T
proposals to synthetic fiber maker Teikoku Sen-i 3302.T were
rejected at its annual shareholder meeting on Thursday,
according to a preliminary announcement from the company.
These included tripling dividend payouts from the current 30
yen ($0.28) per share and halving board members' terms. Details
of the actual vote will only be available next week.
urn:newsml:reuters.com:*:nB9N1E70AZ
Nevertheless, Sparx does not think it is leaving the meeting
empty-handed. Teikoku Sen-i did announce a small increase in
dividend last month. urn:newsml:reuters.com:*:nXB0PI9PG1 urn:newsml:reuters.com:*:nXB05CBHU3
"I think our proposal did have an effect. They surely don't
want to do exactly what we asked. But if we hadn't made the
proposal, they probably would not have raised dividend," said
Shuhei Abe, founder and chief executive officer of Sparx.
A Teikoku Sen-i spokesman said the dividend hike was to
celebrate the company's 110th year anniversary in 2017 and to
reward investors for their support, and declined to comment on
the shareholder proposals.
Abe also said active engagement helps improve shareholder
value.
"Considering the globalisation of the market and Japan's
market and economic situation, we firmly believe the tides have
already turned toward shareholders actively raising issues and
having constructive dialog with firms, and that this trend will
continue to grow stronger," Abe said.
In another battle, Hong Kong-based hedge fund Oasis
Management said on Tuesday its six proposals to Japanese
internet and cryptocurrency firm GMO Internet 9449.T were
rejected at its AGM last week. urn:newsml:reuters.com:*:nL8N1PE0F1
But Oasis said it was encouraged by the fact that some of
its proposals won support from nearly 90 percent of minority
shareholders who voted, including some domestic institutional
shareholders.
Their proposals were voted down largely because of a 41
percent stake its founder and CEO Masatoshi Kumagai and his
personal office hold.
"This vote makes it clear that investors in Japan will stand
up and make their voices heard by voting for positive corporate
governance changes, against recommendations of management, whose
interests have unfortunately deviated from what's best for the
company and all stakeholders," said Seth Fischer, founder and
Chief Investment Officer at Oasis.
GMO's Kumagai said he appreciates that Oasis's proposals are
aimed at boost GMO's value, and asked other investors to
understand that management and Oasis are not in confrontation.
Meanwhile, San Francisco-based activist hedge fund ValueAct
Capital, a mostly long-term value investor, said it was
considering making its first investment in Japan this year.
Allison Bennington, partner of the fund, said ValueAct is
aware that activist funds have long been viewed as "vultures" in
Japan but its approach will be more constructive.
($1 = 106.6000 yen)
(Editing by Jacqueline Wong)
((tomo.uetake@thomsonreuters.com; +81-3-6441-1645; Reuters
Messaging: tomo.uetake.thomsonreuters.com@reuters.net))