By Anton Bridge
(Reuters) – Activist investor Elliott Management has become one of the top three shareholders of Kansai Electric Power with a stake of between 4% and 5%, a person familiar with the matter said on Wednesday.
Kansai Electric’s shares ended the day’s trading up 5.3% following a report of the stake in the Financial Times earlier on Wednesday.
Elliott is urging Kansai Electric, Japan’s top nuclear power operator by reactors online, to increase its dividend to 100 yen per share from 60 yen per share and increase share buybacks by selling non-core assets, the person said.
Elliott has identified non-core assets at the company worth more than 2 trillion yen, including over 1 trillion yen worth of real estate as well as a stake in a construction firm, the person said.
The hedge fund began its engagement with company management around the time of Kansai Electric’s $3.3 billion equity offering announced in November last year, which was issued at around a 30% discount to the trading price, the person said.
Kansai Electric declined to comment on individual shareholders but said “we remain committed to maintaining careful communication with our shareholders.”
A representative for Elliott declined to comment on the stake.
Activist investors have ramped up efforts in Japan, where companies are under pressure from regulators and the Tokyo bourse to boost shareholder returns and corporate value.
Elliott has been active in that push over more than two years, taking stakes in a range of companies including Tokyo Gas, Sumitomo Corp and Dai Nippon Printing.
Elliott is calling for the sale of 150 billion yen ($1 billion) in non-core assets annually at Kansai Electric, the Financial Times reported.
Kansai Electric said in July it had begun surveys for a new nuclear power reactor at its Mihama power station in western Japan, the first concrete step by the country to build a new nuclear power reactor since the 2011 meltdown at Tokyo Electric Power’s Fukushima plant.
Apart from the energy business, Kansai has assets in IT and real estate, among others, but is targeting nuclear power as its main source of near-to-mid-term earnings growth. It plans to keep its dividend per share this fiscal year unchanged at 60 yen, despite a forecast 30% drop in profits to 295 billion yen.
Elliott, which owns a little over a 5% stake in Tokyo Gas, has urged that company to divest parts of its real estate portfolio to boost shareholder value.
In March, Tokyo Gas said it planned an up to 120 billion yen share buyback this fiscal year and was considering selling around 100 billion yen worth of real estate assets over the next few years.
($1 = 147.4700 yen)
(Reporting by Rishabh Jaiswal in Bengaluru and Anton Bridge, Yuka Obayashi and Katya Golubkova in Tokyo; Editing by Himani Sarkar and Sonali Paul)
