Belgian Fund Joins Asset Value in Campaign to Press Japan's TBS

(Bloomberg) -- A Belgian fund joined U.K.-based Asset Value Investors Ltd. in asking Tokyo Broadcasting System Holdings Inc. to sell some shares of unrelated businesses and return cash to shareholders, another sign that activism is picking up in Japan.

Value Square NV has discussed the matter with Asset Value and met with executives at TBS to discuss possible sales of some assets and ways to improve shareholder returns, Kris Hermie, a senior portfolio manager at the fund, said in an interview Wednesday. The Tokyo-based broadcaster didn’t immediately respond to a request for comment.

“There is a mis-allocation of resources of these financial assets,” said Hermie, whose fund owns a less than one percent stake in the broadcaster. 

Behind the investors’ criticism is TBS’s stock portfolio, whose $3.9 billion value exceeds the company’s own market capitalization, including a $1.3 billion holding in chip-equipment maker Tokyo Electron Ltd. Though still rare, shareholder activism is on the rise in Japan after high-profile victories by the likes of New York hedge fund manager Daniel Loeb.

TBS owns shares in scores of companies in industries ranging from technology to retail and finance. In the case of Tokyo Electron, the semiconductor-equipment maker also owns a stake in TBS as part of a cross-shareholding agreement, an exercise that’s been common in Japan for decades, but whose practice is under increasing criticism by shareholder activists.

Japan’s third-largest listed broadcaster by revenue, TBS also has a complex of office towers, retail and residential real estate in one of central Tokyo’s highest-priced neighborhoods. It had net cash of 43 billion yen ($379 million) as of June 30.

Asset Value, which has a small stake in the broadcaster, has also asked TBS to sell part of its stock portfolio.

“Selling down part of the portfolio would be a step in the right direction,” Joe Bauernfreund, chief executive officer of Asset Value, said in a separate interview Oct. 25. He said other investors, including Value Square, are adding to the pressure on the company to “improve capital efficiency.”

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