Elliott Investment Management has taken a stake in Japanese regional utility Kansai Electric Power, according to a person familiar with the matter, the latest move by activist shareholders to squeeze value from Japanese companies.
The hedge fund owns between 4% to 5% of Kansai Electric, the person said, asking not to be identified discussing a private matter. Elliott sees the utility as having more than ?2 trillion ($13.5 billion) of assets, including real estate, outside of its core energy business, the person said. Shares jumped as much as 9.5% in Tokyo.
New York-based Elliott has also urged Kansai Electric to sell off ?150 billion a year of noncore assets, and use the proceeds to boost dividends and share buybacks, the person said. Elliott has asked Kansai to lift its dividend to ?100 from ?60, the person added.
A Kansai Electric spokesperson declined to comment on its interactions with individual shareholders. A spokesperson for Elliott didn¡¯t immediately respond to request for comment.
The Financial Times earlier reported Elliott¡¯s stake in Kansai Electric.
In recent years, activist hedge funds have honed in on property held by Japanese corporations, which is assigned a value on their balance sheets based on original costs. If the real estate is sold, companies can record big profits from the difference between the cost and market value.
Kansai Electric¡¯s noncore assets include an equity stake in Kinden and real estate likely worth ?1 trillion, the person said.
The Osaka-based company operates the most nuclear reactors of any of Japan¡¯s regional utilities, and earlier this year moved forward with a plan to potentially build a new unit. That makes it better positioned than other utilities, whose profits are being squeezed by pricey fossil fuel imports.
Elliott¡¯s push for share buybacks and increased dividends at Kansai Electric ¡°could potentially become a catalyst for utility stocks,¡± said Tsutomu Yamada, an analyst at Mitsubishi UFJ eSmart Securities. Shares of other regional utilities also gained on Wednesday. Chubu Electric Power and Kyushu Electric Power jumped as much as 4.5% and 3.4%, respectively.
The hedge fund took a stake in Japan¡¯s largest utility gas provider, Tokyo Gas, last year, encouraging it to improve its capital efficiency by selling a large amount of the real estate it owns.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.