26
Jun
Activist investors: Changing the game
Activist investor campaigns continue apace in Japan, driven by government policies pushing for better capital efficiency and corporate governance among domestic corporates. Activist proposals are increasingly being supported by other shareholders aiding breakthroughs at the board level. This is a net positive for private equity, which is seeing more deal flow through carve-outs and take-privates. However, the public attention and nature of take-private activism can result in higher prices and fierce competition.
What can be learned from recent campaigns, both successes and failures?
How are private equity firms inserting themselves into the activism space?
To what extent is the activist agenda becoming more nuanced or targeted?
How does Japan compare to other jurisdictions in terms of activism opportunities?
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SpeakersPaul Ford Partner, Deal Advisory, Head of Private Equity KPMG FAS Co., Ltd
Brian Heywood Founding Partner and CEO Taiyo Pacific Partners
Jesper Koll Senior Adviser Monex Group - Japan Catalyst Fund
Toby Rodes Co-Founder Kaname Capital
James Smith Founder & CIO Palliser Capital
Nicholas Smith Japan Strategist CLSA
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Brian is a founding partner and the CEO of Taiyo Pacific Partners, a friendly activist investment fund focused on Japanese Public companies. Over the past 20 years, he has been an advisor and strategist to the CEO’s of well over a hundred portfolio companies invested in by the fund. He speaks Japanese fluently and has a deep working knowledge of the culture and business practices of Japan. In 2014, he led a friendly management buyout of the electronic music instrument company Roland as Taiyo expanded its efforts into private equity. He believes that a critical mission for any private equity investment is to ensure the underlying company and employees are better off after the MBO than they were before. That means making the company more competitive, ensuring it has a strong management structure and balance sheet , and improving the incentives and compensation to properly reward the hard-working and dedicated employees.
Due to his work at Roland, he was asked to join the board of several other publicly traded Japanese companies. Sitting in the board room gives him a unique insight into the structure and function of corporate Japan, an ability to influence decisions, and a bird’s eye view of the opportunities and challenges that exist in one of the most fascinating markets in the world.
Toby Rodes co-founded Kaname Capital in 2018 to bring deep fundamental analysis and engaged ownership to Japanese small caps, a deep pool of operationally capable companies with strong product focus that too frequently suffer a material valuation discount because of substandard governance practices. Passive and conflicted ""allegiant"" shareholders have simply refused to hold boards accountable across the market cap spectrum for delivering on their potential ROE, a core reason for Japan's multi decade economic malaise. Kaname aspires to be a thoughtful, involved, and long-term ""principal"" owner of quality businesses with substantial valuation rerating potential. Prior to co-founding Kaname, Toby spent 12 years at Boston based institutional manager GMO in the Fundamental Active Team, where he managed roughly $4bn in both large and small cap equities in Japan. His greatest professional interest has always been in the small cap discipline where his Japanese language skills and ability to create relationships with management teams led to an informational advantage. His professional career started in the “Think Tank” trenches of Washington DC before moving to Japan from 1993 to 2004, first as a Rotary Japan Ambassadorial Scholar and later for graduate work at Keio University, Tokyo. His investment career started in equity research at Dresdner Kleinwort Benson and Nikko Salomon Smith Barney in Tokyo where he led some high-profile IPOs but determined his calling was the buyside. After ten years of living in Japan, he attended the Harvard Kennedy School in 2003 which served as an intellectual bridge to GMO. He is presently spending half the year in Japan as well as serving on the Japan Society of Boston’s Board of Directors.
Prior to founding Palliser Capital in 2021, James was the head of Elliott’s Hong Kong office. James joined Elliott UK as an Analyst in 2001 where he focused on European investments before moving to Hong Kong and advancing to the roles of Portfolio Manager and Head of Office. Prior to joining Elliott, James gained a variety of experience at financial and start-up firms. He holds a BA (Hons) and MA in Natural Sciences from Cambridge University.