Activist fund Strategic Capital extends hostile bid for Japanese realty firm

Kabukicho, Tokyo, Japan. Photo: Fabrizio Chiagano

Activist fund Strategic Capital said it has extended its hostile bid for Japanese property firm Keihanshin Building without sweetening the terms as the shares fell to the level of the bidding price.

Strategic Capital, set up by Tsuyoshi Maruki, who used to work with Japanese prominent activist investor Yoshiaki Murakami, said recent gains in Keihanshin’s stock price were only driven by the expectation for a higher bid.

Last month it launched a 1,900 yen ($18.42) per share bid to boost its stake to 30% in Keihanshin, which owns office and retail buildings as well as data centres mainly in the Osaka region.

The bid will now run until Jan. 12.

Shares in Keihanshin, which rose as much as 17% to 2,200 yen after the bid was launched, have been trading above the offer price until Wednesday. They closed down at 1,900 yen on Thursday.

“Keihanshin shares rose on expectation the developer would find a white-knight that would offer a higher bid,” Strategic Capital said. “Or on the expectation, we might raise the offer price.”

The activist fund has been pushing Keihanshin to withdraw from low-profit margin leasing business, sell all the rental properties and transform into management of the real estate trust.

Although some analysts say the proposal is too drastic, its bid highlights Japan’s corporate practice of cross-shareholdings among many companies. Companies typically argue cross shareholders are needed to cement business ties but critics say it often functions to fend off hostile proposals.

Keihanshin’s top shareholder is Ginsen Co, a privately-held insurance agent whose top shareholder is Sumitomo Mitsui Banking Corp, the main banking unit of Sumitomo Mitsui Financial Group.

Sumitomo Mitsui Banking is one of the shareholders of Keihanshin. Air conditioning maker Daikin Industries and contractor Kajima Corp, both of which are partially owned by Sumitomo Mitsui Banking, are also Keihanshin’s shareholders, according to Refinitiv’s Eikon.

The tender offer is conducted by Strategic Capital and another fund, which together own a 9.7% stake in the company. They are seeking to acquire a roughly 20% stake.

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.