Japan's Sparx seeks better return from firefighting gear maker Teikoku Sen-i
10/04/2017 10:56
By Junko Fujita
TOKYO, April 10 (Reuters) - Japan's Teikoku Sen-i Co
3302.T , a manufacturer of fire-fighting equipment, must boost
its return on equity, asset management firm Sparx Group Co Ltd
8739.T said on Monday, adding that it had boosted its holdings
in the company.
Sparx, which manages about $8.6 billion in assets, asked
Teikoku Sen-i to sell its stock holdings and provide information
on plans for business investment and returns to shareholders.
"Teikoku Sen-i is cheap, and has a lot of potential to boost
its earnings," said Sparx Chief Executive Shuhei Abe. "This is a
rare Japanese company. But the company is not looking at
shareholders at all."
The move comes amid silence by Japanese institutional
investors on the issue of corporate management, despite
publication of a stewardship code by Japan's Financial Services
Agency in 2014, aiming to improve corporate governance and
investment returns.
Tokyo-based Teikoku Sen-i has about 43 billion yen ($386.07
million) in capital, of which its shareholding in a property
developer, Hulic, accounts for 13 billion yen, said Abe.
Teikoku Sen-i's capital is largely affected by the
performance of Hulic, said Abe, adding that its return on equity
would be boosted if it sold most of its Hulic shares.
Unlike other activist funds that have targeted Japanese
firms with shareholder proposals on specific demands made at
annual shareholder meetings, Sparx is not planning such action,
however.
In 2015, C&I Holdings, a fund affiliated with activist
investor Yoshiaki Murakami, called for the election of four new
directors at Kuroda Electric Co 7517.T to achieve its demand
for the company to improve investor returns and boost growth.
Others, including major electronics companies Sony Corp
6758.T and Nintendo Co 7974.T , have found themselves in the
sights of dissident investors in the past.
Sparx will keep talking to Teikoku Sen-i management and also
hopes other shareholders will be vocal, Abe said, adding that
Sparx wanted to pursue its own strategy to drive change at the
company.
An official at Teikoku Sen-i said it holds Hulic shares for
historical reasons but reducing its stake in Hulic may not make
sense, considering its dividend payments.
The company has been steadily boosting dividend payments to
shareholders, added the official who declined to be identified
because he was not authorised to speak to the media.
Sparx, which said it has been gradually increasing its stake
in Teikoku Sen-i since first investing in 2014, made a filing to
a local government authority on Monday as its holdings reached
5.07 percent, crossing a threshold for such a filing.
($1=111.3800 yen)
(Reporting by Junko Fujita; Editing by Clarence Fernandez)
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Keywords: SPARX GROUP JAPAN/TEIKOKU SEN I