Activist investor campaigns in Japan caused a stir earlier this year whenEffissimo Capital Management andFarallon Capital Management, raised concerns about the management of Japanese conglomerate Toshiba.
With 10 activist investor campaigns in the first half of 2021, Japan is now second to the US when it comes to this type of activism, according to a July report by financial advisory and asset management company Lazard.
Japan represents 26% of new, non-US shareholder activist campaigns globally, up from 6% in 2015. This comes in the wake of a record 25 such campaigns in Japan in 2020—up from 19 in 2019 and four in 2015.
“Until recently, most regulations and media have focused on boards of directors and corporate governance. Now in Japan, we are seeing much more attention devoted to active engagement and investor stewardship,” says Tokyo-based financial adviser Frank Packard.
Activist investor campaigns in Japan caused a stir earlier this year when two foreign asset management companies, Singapore-based Effissimo Capital Management and US-headquartered Farallon Capital Management, raised concerns about the management of Japanese conglomerate Toshiba.
In March, Effissimo, a 9.9% Toshiba shareholder, demanded an extraordinary general meeting to establish whether Japan’s Ministry of Economy, Trade and Industry (METI) had worked with Toshiba’s executives to “unduly influence” the votes of key shareholders ahead of last year’s annual general meeting, Reuters reported.
An independent report released in June found that METI and Toshiba’s executives had indeed worked together to bend the rules and devise a strategy to suppress the votes of foreign activist investors ahead of that meeting.
Earlier, in April, Toshiba’s CEO was forced to resign amid controversy over a $20 billion buyout offer by CVC Capital Partners—the CEO’s former employer—and friction with activist investors including Farallon Capital Management, a 5% Toshiba shareholder. Farallon had raised concerns over Toshiba’s change in growth strategy.
“Institutional investors are becoming more actively engaged as part of their fiduciary roles,” says Packard. “Active engagement is now seen widely in Japan as an important tool of investor stewardship to improve corporate profitability.”