In a year marked by volatile trading on the Tokyo Stock Exchange, shares of convenience store operator Seven & i and utility provider Tokyo Gas soared on Wednesday, despite losses in the broader market. This surge highlights the frenetic nature of trading as the benchmark Topix index has experienced dramatic fluctuations, including a bear market following a record high in July, only to rebound by 20% as local and global investors returned.
Seven & i’s stock jumped as much as 11% after reports surfaced that the founding family is working towards taking the company private by the end of its fiscal year in February. Meanwhile, Tokyo Gas saw its shares rise by 15% following news that Elliott Investment Management has acquired a significant stake in the company and may propose “important proposals” for its future.
Elliott’s investment is part of a broader trend of activist investors gaining traction in Japan, pushing for higher returns from their stakes. Kobayashi Pharma also saw a boost, with shares climbing 6.4% after Oasis Management Co. increased its ownership.
“This shift represents a new characteristic for Japan’s market,” commented Tomo Kinoshita, global market strategist at Invesco Asset Management Japan. He noted that investors are increasingly focusing on individual stocks driven by buyout proposals and activist movements rather than traditional large exporters vulnerable to yen fluctuations.
Reports indicate that a special-purpose company formed by Seven & i’s founding family is planning to raise over ¥8 trillion ($51.7 billion) from major banks and U.S. financial institutions to facilitate the buyout. Although the exact price remains undisclosed, investor sentiment is optimistic, viewing this move as a serious commitment from the founding family.
Additionally, Elliott Investment has disclosed a 5.03% stake in Tokyo Gas, suggesting potential plans to divest valuable assets, including properties worth approximately ¥1.5 trillion. This marks Elliott’s first acquisition of more than 5% in a Japanese company since 2019.
Tokyo Gas stands as Japan’s largest supplier of fossil fuels, commanding around 30% of the domestic market and boasting extensive international investments, including an offshore wind fund and a U.S. shale gas subsidiary.
As activist funds continue to target Japanese companies, the landscape is shifting towards unlocking hidden value and enhancing shareholder returns, signaling an evolving investment environment in Japan.
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