LONDON–Asset Value Investors (“AVI”) announces that its dividend proposal received a record level of votes at the Annual General Meeting of Teikoku Sen-i (“Teikoku Sen-i” or the “Company”) (TSE: 3302) on 27th March 2020.
AVI’s proposal for a ¥76 per share dividend received 24.7% approval, topping the level of support for dividend proposals submitted by shareholders in previous years.
AVI’s proposal for a ¥2 billion share buyback received good support with a 22.0% approval.
AVI CEO Joe Bauernfreund commented, “Considering that “Group Shareholders” own a significant portion of the company the level of support for our proposals is encouraging.”
“General shareholders like ourselves who hold their shares as an investment, and not as a token of separate business relationships, are sending Teikoku Sen-i management and affiliated group shareholders the message that a balance sheet bloated with investment securities and other financial assets must be reformed.”
“There is no way to justify a balance sheet in which 64% of total assets consist of cash and investment securities, including a “strategic holding” in an unrelated real estate company Hulic accounting for 32% of total assets”.
“We remain hopeful that the Company’s affiliated group shareholders will encourage management to rationalise Teikoku Sen-i’s value-destructive capital structure.”
The Company’s proposal to renew its shareholder rights plan (“poison pill”) was opposed by 21.9% of shareholders, reflecting the view of Institutional Shareholder Services (“ISS”) and general shareholders that the effect of the plan is to entrench incumbent management.
Reflecting the recommendation of proxy advisory firm ISS that President Tsuyoshi Shiraiwa be held responsible for the Company’s questionable capital management, shareholder disapproval for his re-election was higher than in the preceding year.
AVI looks forward to continuing its dialogue with the Company as long-term shareholders.
Founded in London in
1985, AVI has a long history of investing in Japan. Over the past few years we
have observed the heightening interest in Japan driven by corporate governance
reforms. What we have seen convinces us that profound change is underway, and we
launched a dedicated fund, AVI Japan Opportunities Trust (‘AJOT’), to target
the plentiful opportunities the reforms will bring. Across AJOT and AVI Global
Opportunities Trust (‘AGT’), AVI has ¥55bn invested in Japan.
We always take a
long-term view with our investments, seeking high-quality companies that the
market misunderstands and undervalues. We work with company management and
boards to improve long-term corporate value.
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* As at 28 January 2022
** Source: Morningstar, performance period 23 October 2018 to 28 January 2022, TR net of fees, GBP
*** As at 30 September 2020, includes: management fee 1.0%, marketing and administration costs.
AVI Japan Opportunity Trust p.l.c is referred to as ‘AJOT’ throughout the website. AJOT’s investment managers, Asset Value Investors are referred to as ‘AVI’