TOKYO :Activist investor Elliott Management, a shareholder in Kansai Electric Power, said the Japanese utility could become a more attractive long-term investment by selling non-core assets and boosting profitability and shareholder returns.
Elliott has become one of the top three shareholders of Kansai Electric, Japan’s biggest nuclear power operator by reactors online, with a stake of between 4 per cent and 5 per cent, a person familiar with the matter said on Wednesday.
In a statement issued from London on Wednesday, Elliott said it was looking forward to working with Kansai Electric’s management and other key stakeholders to strengthen the company’s core business.
“By increasing shareholder returns, unlocking capital from its non-core assets and improving profitability, we believe the company can enhance its funding flexibility for future growth and bolster its appeal as a long-term investment proposition,” its statement said.
Elliott wants Kansai Electric to boost its dividend to 100 yen per share from 60 yen per share and increase share buybacks by selling non-core assets, according to the source familiar with the matter, who was not authorised to speak publicly.
Elliott has identified non-core assets at the company worth more than 2 trillion yen ($13.58 billion), including over 1 trillion yen of real estate as well as a stake in a construction firm, the source said.
Elliott’s statement did not provide details on its stake in Kansai Electric or other specific proposals. Kansai Electric did not respond immediately to a request for comment.
Elliott has been active in a push for Japanese companies to boost shareholder returns and corporate value, taking stakes in a range of companies including Tokyo Gas, Sumitomo Corp and Dai Nippon Printing.
Apart from the energy business, Kansai Electric has assets in IT and real estate, among others, but it is targeting nuclear power as its main source of near-to-mid-term earnings growth. It plans to keep its dividend per share this fiscal year flat at 60 yen, despite a forecast 30 per cent drop in profits to 295 billion yen.
Kansai Electric said in July it had begun surveys for a new nuclear power reactor at its Mihama power station in western Japan, the first concrete step by the country to build a new nuclear power reactor since the 2011 meltdown at Tokyo Electric Power’s Fukushima plant.
($1 = 147.2800 yen)
